POLITICAL  ECONOMY 


BY 

HENRY  CAREY  BAIRD. 


IRE  PRINTED  FROM  THE  AMERICAN  CYCLOPMJDIA.-] 


NEW  YOEK:  D.  APPLETON  AND  COMPANY. 

1875. 


POLITICAL  EOOXOMY^  properly,  an  ex- 
position of  the  measures  necessary  for 
directing  the  moYements  of  society  so  that 
man  may  act  in  harmony  with  those  natu- 
ral laws  which  control  his  efforts  to  improve 
his  condition.  Social  science  treats  of  the 
laws  themselves.  Prof.  E.  Thompson  would 
substitute  for  the  name  political  economy 


that  of  national  economy.  Great  confusion 
exists  not  only  in  regard  to  the  definition 
of  political  economy  itself,  hut  as  to  the 
meaning  of  the  various  expressions  used  in 
treating  of  the  subject,  and  even  as  to  a 
general  understanding  of  its  scope,  v^ome 
writers  have  treated  it  as  a science,  others 
as  an  art,  and  Sir  James  Steuart  speaks  of 


POLITICAL  ECONOMY 


2 

it  as  a combination  of  the  two.  Mr.  Senior 
considers  it  “ the  science  which  treats  of  the 
nature,  the  production,  and  the  distribution  of 
wealth.”  Archbishop  Whatelv  would  give  it 
the  name  of  “catallactics,  or  the  science  of  ex- 
changes.” J.  E.  McCulloch  considers  it  “ the 
science  of  the  laws  which  regulate  the  produc- 
tion of  those  material  products  which  have 
exchangeable  value,  and  which  are  either  ne- 
cessary, useful,  or  agreeable  to  man.”  Storch 
says  it  “is  the  science  of  the  natural  laws 
which  determine  the  prosperity  of  nations, 
that  is  to  say,  their  wealth  and  civilization.” 
Sismondi  considers  “the  physical  welfare  of 
man,  so  far  as  it  can  be  the  work  of  govern- 
ment or  society  as  the  object  of  political  econ- 
omy.” Say  defines  it  as  “the  economy  of  so- 
ciety; a science  combining  the  results  of  our 
observations  on  the  nature  and  functions  of 
the  different  parts  of  the  social  body.”  John 
Stuart  Mill  considers  it  “ the  science  which 
treats  of  the  production  and  distribution  of 
wealth,  so  far  as  they  depend  upon  the  laws  of 
human  nature,”  or  “the  science  relating  to  the 
moral  or  psychological  laws  of  the  production 
and  distribution  of  wealth.”  The  progress  thus 
far  made  in  political  economy  has  been  slow 
and  uncertain,  and  in  its  entire  range  there  is 
hardly  a doctrine  or  even  the  definition  of  an 
important  word  which  is  accepted  beyond  dis- 
pute. In  1844  De  Quincey  acknowledged  that 
it  did  not  advance,  and  that  from  the  year 
1817  it  had  “on  the  whole  been  station- 
ary;” and  he  adds:  “Nothing  can  be  postula- 
ted, nothing  can  be  demonstrated,  for  anarchy 
even  as  to  the  earliest  principles  is  predomi- 
nant.” Amid  all  their  discords  and  disagree- 
ments, it  is  possible  to  divide  political  econo- 
mists under  two  general  heads:  those  who 
treat  the  subject  as  a deductive  science,  “ in 
which  all  the  general  propositions  are  in  the 
strictest  sense  of  the  word  hypothetical;”  and 
those  who  treat  it  by  the  inductive  method. 
Tiiey  may  also  be  divided  into  those  who  fol- 
low Ricardo  with  his  fundamental  doctrine  of 
the  theory  of  rent,  and  those  who  have  given 
in  their  adhesion  to  Oarey’s  law  of  the  occu- 
pation of  the  earth.  The  adverse  views  as  to 
the  practical  effects  of  the  application  of  pro- 
tection and  free  trade  are  quite  inadequate  to 
serve  the  purpose  of  division,  since  many  of  the 
believers  in  one  or  the  other  of  these  doctrines 
quite  disagree  in  regard  to  other  and  important 
questions.  The  discordant  state  of  this  so- 
called  science  therefore  renders  it  necessary  in 
this  place  to  trace  out  the  history  of  economic 
ideas,  and  to  give  an  account  of  the  views  and 
opinions  at  present  held  by  the  adverse  schools 
and  their  various  teachers. — A science  under- 
lying the  art  of  political  economy  was  quite 
unknown  to  the  ancients,  although  they  had 
brought  under  observation  many  facts  which 
gave  rise  to  true  and  valuable  economic  doc- 
trines. These  doctrines  or  rules  were  how- 
ever quite  empirical,  isolated,  and  not  elabo- 
rated into  broad  and  far-reaching  principles. 


and  had  in  view  far  more  the  advancement  of 
the  state,  its  treasury,  and  its  military  power, 
than  the  prosperity,  the  happiness,  and  the 
freedom  of  the  people.  Nevertheless  it  is  im- 
portant to  recognize  the  fact  of  the  origin  of 
political  economy  in  these  early  and  imper- 
fectly stated  doctrines.  The  ancient  code  of 
India,  the  Institutes  of  Mann,  contains  provi- 
sions as  to  the  revenues,  usury,  &c. ; but  these 
provisions  are  merely  designed  to  establish  and 
fix  the  respective  rights  and  duties  of  the  sov- 
ereign and  his  subjects,  and  of  the  subjects 
among  themselves.  In  Attica  agriculture  was 
commended  and  encouraged,  and  the  price  of 
agricultural  produce  was  generally  low ; while 
the  products  of  various  branches  of  diversified 
industry  were  important,  but  the  prices  were 
generally  high.  Foreign  trade  was  carried  on 
extensively  with  the  various  countries  on  the 
shores  of  the  Mediterranean  and  Black  seas. 
Duties  were  levied  upon  foreign  imports,  but 
almost  if  not  quite  wholly  with  a view  to  the 
revenue  of  the  state.  Interest  was  high,  and 
money  was  scarce  and  hard  to  procure.  “ In 
every  Greek  state,”  says  Bockh,  “ the  finances 
were  in  the  hands  of  the  sovereign  power ; and 
at  Athens  the  legislation  on  financial  matters 
belonged  to  the  people,  the  administration  of 
them  to  the  supreme  council.  Then,  as  well 
as  now,  the  administration  of  the  finances  was 
considered  one  of  the  most  important  branch- 
es of  the  public  affairs,  and  the  statesman  who, 
like  Aristides  or  Lycurgus,  succeeded  in  pla- 
cing them  in  a flourishing  condition,  gained 
the  good  will  of  the  people  and  tlie  admira- 
tion of  posterity.”  The  laws  of  Lycurgus  deal 
with  many  economic  questions,  such  as  money, 
usury,  taxes,  lands,  and  the  employment  of 
the  people ; but  almost  the  sole  idea  through- 
out these  laws  is  the  establishment  of  the  mil- 
itary power  of  Sparta.  “ Lycurgus,  or  the  in- 
dividual to  whom  this  system  is  owing,  who- 
ever he  was,”  says  Grote,  “ is  the  lawgiver  of 
a political  community ; his  brethren  live  to- 
gether like  bees  in  a hive,  with  all  their  feelings 
implicated  in  the  commonwealth,  and  divorced 
from  house  and  home.”  The  earliest  treatise 
on  an  economic  subject  is  believed  to  be  “ The 
Eryxias,  or  About  Wealth,”  erroneously  at- 
tributed to  ^'Eschines  Socraticus,  a disciple  of 
Socrates.  Plato  (“The  Republic,”  book  ii.) 
calls  attention  to  the  necessity  for  separate 
employments,  and  in  the  opinion  of  Blanqui 
“ he  has  pointed  out  the  advantages  of  a di- 
vision of  labor  with  perfect  clearness,  and 
appears  to  us  to  take  from  Adam  Smith  the 
merit  of  this  discovery.”  He  also  regards  the 
passage  in  which  Plato  conducts  his  reader  to- 
ward a definition  of  money  by  tracing  up  the 
necessity,  in  a community  of  diversified  em- 
ployments and  wants,  of  “an  established  coin- 
age as  a symbol  for  the  purposes  of  exchange,” 
as  most  remarkable,  partaking  of  the  nature  of 
most  ingenious  art.  On  the  other  hand,  in  the 
opinion  of  Say,  Plato  “ has  with  tolerable  fidel- 
ity sketched  the  effects  of  the  separation  of 


POLITICAL  ECONOMY 


<sS 


social  employments,  but  solely  with  a view  to 
point  out  man’s  social  character,  and  the  ne- 
cessity he  was  in,  from  his  multifarious  wants, 
of  uniting  in  extensive  societies,  in  which  each 
individual  might  be  exclusively  occupied  with 
one  species  of  production.  It  is  an  entirely 
political  view,  from  which  no  other  conse- 
quence can  be  drawn.”  Xenophon  contributed 
two  brief  essays  to  early  political  economy, 
one  “On  the  Revenues  of  Athens,”  the  other 
“The  Economist.”  The  political  economy  of 
Xenophon,  as  Blanqui  holds,  “rests  on  no 
other  foundation  than  that  of  Plato.  When- 
ever he  undertakes  to  analyze  the  opera- 
tions of  labor,  to  trace  revenue  to  its  source, 
to  determine  the  utility  of  things,  the  clear- 
ness of  this  writer  is  admirable ; but  as  soon 
as  he  touches  the  question  of  the  distribution 
of  profits,  the  Greek  prejudices  reassume  their 
sway,  and  the  author  falls  back  into  the  politics 
of  Plato  and  Aristotle,  faithful  interpreters 
of  the  contemporary  oligarchy.”  Carey  says : 
“ Xenophon  urged  upon  his  Athenian  country- 
men that,  in  default  of  the  domestic  market  for 
food  that  would  have  resulted  from  the  prop- 
er development  of  the  mineral  treasures  with 
which  their  soil  abounded,  agriculture  had  be- 
come impossible ; many  having  been  forced  to 
abandon  it,  becoming  usurers  or  brokers  ;”  and 
he  adds:  “This  is  probably  the  earliest  ex- 
hibit on  record  of  the  dependence  of  agricul- 
ture on  the  mining  and  manufacturing  indus- 
tries.” Aristotle,  however,  in  a greater  degree 
than  any  other  of  the  ancients,  contributed  to 
the  foundation  of  political  economy.  His  three 
treatises — “Ethics,”  which  treats  of  the  regu- 
lation of  the  individual  man;  “Politics,”  of 
the  relation  of  man  toward  others  in  asocial 
capacity,  both  private  and  public,  the  family 
and  the  state  ; and  “ Economics,”  of  the  rela- 
tion of  man  toward  property — constitute  in  a 
measure  a connected  work,  each  being  depen- 
dent on  and  interwoven  with  the  others.  The 
expression  political  economy  was  first  used  by 
Aristotle,  and  is  to  be  found  in  the  “ Econom- 
ics,” book  ii.  chap.  i.  He  lays  down  the  dog- 
ma that  the  bounty  of  nature  is  the  only  true 
source  of  wealth,  and  he  holds  in  great  abhor- 
rence trading  and  usury,  which  latter,  he  says, 
“is  most  reasonably  detested,  as  the  increase 
of  our  fortune  arises  from  the  money  itself, 
and  not  by  employing  it  to  the  ])urpose  for 
which  it  was  intended.”  In  his  “Rhetoric” 
he  lays  down  the  most  important  princijdes  of 
political  policy  as  follows  : finance,  peace  and 
war,  the  safeguard  of  tbe  counti'y,  importa- 
tion and  exportation,  and  legislation.  But  lit- 
tle attention  was  paid  to  economic  studies  for 
many  centuries  after  the  time  of  Aristotle. 
Agriculture  was  looked  upon  with  much  more 
favor  than  any  other  emjdoyment  involving 
labor,  but  even  farm  labor  was  performed  al- 
most entirely  by  slaves  belonging  to  and  em- 
ployed by  the  landlords.  The  light  in  which 
trade  was  regarded  by  the  Romans  may  be 
gathered  from  Cicero,  who  in  his  Be  Offieiis 


says : “ The  gains  of  merchants,  as  well  as  of 
all  who  live  by  labor  and  not  skill,  are  nu'an 
and  illiberal.  Tbe  very  mercbandise  is  a badge 
of  tbeir  slavery.”  “ All  artisans  are  engaged 
in  a degrading  profession,”  and  “ there  can 
be  nothing  ingenuous  in  a workshop.”  Sla- 
very was  the  very  foundation  of  the  industrial 
system  of  both  Greeks  and  Romans,  as  war 
was  of  the  national  policy.  The  great  Ro- 
man roads  were  built  with  a view  to  their  mili- 
tary advantages,  and  not  to  trade  and  indus- 
try. Agriculture  was  the  principal  industrial 
occupation  of  tbe  Romans,  who  were  alike  in- 
disposed to  diversified  industries  and  foreign 
trade.  Blanqui  says  : “All  the  Roman  legisla- 
tion, from  the  glorious  days  of  the  republic  to 
the  fall  of  the  empire,  is  but  the  faithful  repro- 
duction of  the  unconquerable  prejudices  of  this 
people  against  labor  and  industry.”  Augus- 
tus pronounced  the  penalty  of  death  against 
the  senator  Ovinius  for  having  degraded  him- 
self by  conducting  a manufactory.  Tbe  Jus- 
tinian code  (A.  D.  528-535)  takes  cognizance 
not  merely  of  the  laws  but  of  the  arts,  the 
industries,  and  agriculture,  and  has  been  pro- 
nounced “ the  first  indication  of  a systematic 
political  economy.”  The  “ Capitularies  ” of 
Charlemagne,  promulgated  in  801,  have  an 
economic  interest  from  the  fact  that  they  take 
account  as  well  of  the  employment  and  con- 
dition of  the  people  as  of  the  revenues  of  the 
state  and  the  mode  of  assessing  and  collecting 
these  latter.  Yet  the  sovereign  and  the  state 
were  subjects  of  far  more  solicitude  than  the 
condition  of  the  people.  Hence  for  this  am<  rg 
other  causes  Charlemagne  failed  to  found  an 
enduring  empire. — During  the  earlier  parts  of 
the  niicldle  ages  no  advance  was  made  either 
in  commercial  adventure  or  in  letters;  but 
“ the  fortunate  enterprises  of  tbe  Portuguese 
and  Spaniards  during  the  15th  century,  tbe 
active  industry  of  Venice,  Genoa,  Florence, 
Pisa,  the  provinces  of  Flanders,  and  the  free 
cities  of  Germany,  about  the  same  period, 
gradually  directed  the  attention  of  some  phi- 
losophers to  the  theory  of  wealth.”  These 
investigations  originated  in  Italy.  “As  far 
back  as  the  16th  century,”  adds  Say,  “Bote- 
ro  had  been  engaged  in  investigating  the  real 
sources  of  public  prosperity.”  The  real  and 
substantial  foundation  of  systematic  political 
economy  may  be  said  to  have  been  laid  about 
tbe  close  of  the  16th  century.  Botero’s  “ Cause 
of  the  Greatness  of  Cities”  (London,  1635), 
translated  from  a work  of  his  published  in 
Venice,  1598,  is  one  of  the  earliest  modern 
treatises  on  an  economic  subject.  McCulloch 
says  it  “is  principally  worthy  of  notice  from 
its  showing  that  the  author  was  fully  master 
of  all  that  is  really  true  in  the  theory  of  l^lal- 
thus.”  The  earliest  general  treatise  of  mod- 
ern times,  and  the  first  bearing  the  title  of 
political  economy,  is  the  Traite  de  Veconomie 
politique,  by  Antoine  de  Montchrestien  (4to, 
Rouen,  1613).  This  work  treats  of  the  util- 
ity of  mechanic  arts  and  the  regulation  of 


f 5011.0 


4 


POLITICAL  ECONOMY 


luamifactures,  the  employment  of  men,  the 
trades  most  important  to  communities,  com- 
merce, transportation,  money,  &c.  In  1613 
Antonio  Serra  published  in  Naples  a volume 
on  the  causes  which  tend  to  aid  an  accumula- 
tion of  the  precious  metals  in  those  countries 
which  do  not  produce  th^  ; and  in  1616  Gian 
Donato  Turbulo  published  in  the  same  city  a 
treatise  on  the  money  of  the  country.  About 
this  time  treatises  on  commerce  and  the  pro- 
hibitive system  were  published  by  Duarte  Go- 
mez (Lisbon,  1622)  and  Juan  de  Castafiares 
(1626). — The  attention  of  the  earliest  English 
writers  on  political  economy  was  directed  to 
foreign  trade.  They  saw  that  it  was  desirable 
to  have  a metallic  currency  suited  to  the  wants 
of  the  business  of  their  country,  and  while 
advocating  the  extension  of  this  trade  they 
recommended  the  adoption  of  such  measures 
as  would  cause  gold  and  silver  to  flow  into  the 
country,  and  not  out.  The  policy  advocated  by 
this  school  is  known  to  economists  as  the  mer- 
cantile system.  It  was  supported  among  oth- 
ers by  Thomas  Mun  in  “A  Discourse  of  Trade 
from  England  unto  the  East  Indies”  (1621), 
and  by  the  same  author  in  “ England’s  Trea- 
sure by  Forraign  Trade,  or  the  Balance  of  our 
Forraign  Trade  is  the  Rule  of  our  Treasure” 
(1664).  The  last  named  treatise  was  probably 
written  as  early  as  1635-’40.  In  1663  appeared 
“England’s  Interest  and  Improvement,”  by 
Samuel  Fortrey,  who  held  that  the  trade  with 
France  occasioned  a clear  loss  equal  to  the 
balance  against  England.  This  was  attacked 
by  an  anonymous  author  in  “ England’s  Great 
Happiness”  (London,  1677).  Another  writer 
of  this  school  was  Misselden,  who  in  1623 
published  his  “ Circle  of  Commerce.”  In 
1638  appeared  Sir  Josiah  Child’s  “Brief  Ob- 
servations concerning  Trade  and  the  Interest 
of  Money,”  of  which  a new  edition  appeared 
in  1690,  entitled  “A  new  Discourse  of  Trade.” 
Its  author  is  usually  classed  among  the  mer- 
cantile school,  but  he  did  not  regard  a direct 
examination  of  the  comparative  amount  of 
imports  and  exports,  or  even  the  movements 
of  the  precious  metals,  as  a proper  test  of  the 
advantages  or  disadvantages  of  a foreign  trade; 
he  rather  looked  to  its  increase  or  decrease  as 
presenting  the  most  tangible  evidence.  He 
advocated  reducing  the  rate  of  interest  from 
6 to  4 per  cent.,  believing  it  to  be  the  unum 
magnum^  as  he  expressed  it,  and  that  it  would 
greatly  facilitate  business.  He  recommended 
“the  prevention  of  the  exportation  of  our  wool, 
and  encouraging  our  woollen  manufactures,” 
and  that  in  Ireland  the  “linen  rather  than 
the  woollen  manufacture  be  set  up  further, 
that  the  trade  of  those  countries  “ that  vend 
most  of  our  manufactures,  or  supply  us  with 
materials  to  be  further  manufactured  in  Eng- 
land,” be  most  encouraged.  Andrew  Yarran- 
ton  published  England’s  Improvement  by  Sea 
and  Land:  to  outdo  the  Dutch  without  Fight- 
ing, to  pay  Debts  without  Moneys,  to  set  at 
Work  the  Poor  of  England  with  the  Growth 


of  our  own  Lands,”  &c.  (2  parts,  1677-’81). 
He  designed  to  advance  the  prosperity  and 
power  of  England  by  the  introduction  of  a 
general  system  of  banking,  thus  furnishing 
“ the  great  sinews  of  trade,  the  credit  thereof 
making  paper  go  in  trade  equal  with  ready 
money,”  a registry  of  real  estate  to  facilitate  its 
transfer  and  mortgage,  the  improvement  and 
development  of  the  production  and  trade  in 
linen,  woollen  goods,  and  iron,  the  introduction 
of  canals  and  the  improvement  of  rivers  and 
harbors,  with  a view  to  facilitating  internal 
trade  and  intercourse.  He  held  that  a country 
desiring  to  be  rich,  powerful,  and  happy  must 
introduce  a diversified  industry ; and  he  recog- 
nized the  necessary  means  for  bringing  about 
its  development.  “Above  all,”  says  Patrick 
Edward  Dove,  who  regards  him  as  the  founder 
of  English  political  economy,  “ we  must  note 
his  prospective  sagacity,  for  he  points  out  in 
detail  the  very  course  that  England  has  pur- 
sued, and  the  vpry  elements  that  were  to  con- 
tribute to  her  commercial  superiority.” — An 
important  era  in  the  history  of  political  econ- 
omy, as  well  as  of  industrial  development,  was 
the  year  1661,  when  Louis  XIV.  made  Colbert 
comptroller  general  of  the  finances  of  France. 
He  reduced  the  national  finances  to  system  and 
order,  and  instituted  a complete  plan  of  checks 
and  balances ; reformed  abuses  in  this  depart- 
ment, and  punished  those  who  had  been  guilty 
of  them ; increased  the  revenues  of  the  state 
while  at  the  same  time  he  decreased  the  bur- 
dens of  the  people;  provided  for  economical 
expenditures,  and  abolished  many  of  the  inter- 
nal taxes  ; developed  agriculture,  manufactures, 
the  arts,  and  the  sciences;  improved  roads  and 
rivers,  built  canals,  and  by  every  means  fos- 
tered and  increased  the  internal  commerce  of 
the  country.  By  some  writers  certain  features 
of  his  tariff  laAvs  of  1664  and  1667'  have  been 
condemned  ; but  on  the  other  hand  we  are  as- 
sured that  for  several  years  before  his  adminis- 
tration “ France  swarmed  with  vagabonds  and 
mendicants,”  and  had  reached  “ the  most  pro- 
found depth  of  commercial  depression,”  and 
that  under  the  laws  of  which  he  Avas  the  au- 
thor she  rose  to  “ a point  of  Avealth  and  in- 
dustry far  beyond  any  she  had  ever  reached 
since  the  foundation  of  the  monarchy ;”  and  M. 
Say  says : “ It  is  not  true  that  Colbert  ruined 
France,”  but  that,  “ on  the  contrary,  France 
under  Colbert’s  administration  emerged  from 
the  distress  in  Avhich  two  regencies  and  a Aveak 
reign  had  involved  her.” — The  various  restric- 
tions upon  trade,  especially  upon  the  importa- 
tion of  manufactured  goods  and  the  exporta- 
tion of  the  raw  materials  used  in  manufactures, 
at  this  time,  and  even  later,  and  especially  in 
England,  Avere  very  onerous.  The  penalties 
for  the  infringement  of  the  laws  were  in  many 
cases  cruel  and  even  barbarous.  This  system, 
Avith  the  policy  pursued  under  it,  was  attacked 
by  various  Avriters.  Among  the  earliest  and 
ablest  of  these  AA^as  Sir  Dudley  North,  Avho  pub- 
lished “Discourses  on  Trade”  (4to,  London, 


POLITICAL  ECONOMY 


1691).  Among  the  doctrines  held  by  him  as 
fundamental  were:  “That  the  whole  world  as 
to  trade  is  but  as  one  nation ; that  money  is  a 
merchandise  whereof  there  may  be  a glut  as 
well  as  scarcity,  and  that  even  to  an  inconve- 
nience ; that  a people  cannot  want  money  to 
serve  the  ordinary  dealing,  and  more  than 
enough  they  will  not  have ; and  that  money 
exported  in  trade  is  an  increase  to  the  wealth 
of  a nation.”  Sir  William  Petty,  in  “ Quantu- 
lumcunque,  or  a Tract  concerning  Money,”  had 
in  1682  attacked  the  theory  of  “the  balance  of 
trade;”  and  at  a subsequent  day  there  were 
many  champions  on  both  sides  'of  this  vexed 
question;  among  others,  Dr.  Davenant  (1695- 
1712)  and  the  Rev.  Josiah  Tucker  (1753),  who 
espoused  the  so-called  mercantile  theory,  and 
Sir  Matthew  Decker  (1744)  and  Joseph  Harris 
(1757-’8),  who  opposed  it.  In  1698  appeared 
in  London  “ Historical  and  Political  Essays, 
or  Discourses  on  Several  Subjects,”  including 
money,  government,  &c.,  by  John  Locke,  com- 
prising papers  which  had  been  previously  pub- 
lished, in  which  he  had  for  the  first  time  pro- 
mulgated some  of  the  favorite  theories  in  re- 
gard to  money  now  held  by  European  econo- 
mists. He  taught  that  men  in  their  bargains 
contract  “ not  for  denominations  or  sounds,  but 
for  the  intrinsic  value,  which  is  the  quantity  of 
silver  by  public  authority  warranted  to  be  in 
pieces  of  such  denominations ;”  and  further, 
that  “one  metal  alone  can  be  the  money  of  ac- 
count and  contract,  and  the  measure  of  com- 
merce in  any  country  ; ...  all  other  metals, 
gold  as  well  as  lead,  are  but  commodities.” — In 
1758  appeared  at  Versailles  the  Tableau  econo- 
mique^  et  maximes  genhales  du  gouvernement 
economique^  by  Francois  Quesnay,  followed 
by  Theorie  de  Vimpot^  by  the  elder  Mirabeau 
(1760),  La  pMlosopTiie  rurale^  also  by  Mira- 
beau (1763),  and  various  other  works  by  Ques- 
nay and  his  disciples,  expounding  the  physio- 
cratic  or  agricultural  system  of  economy.  The 
physiocrat! sts  held  that  the  earth  is  the  sole 
producer  of  wealth,  and  divided  the  industrial 
members  of  society  into  three  classes : 1,  the 
proprietors  of  the  land;  2,  the  cultivators, 
whom  they  regarded  as  a productive  class ; 3, 
the  mechanics,  manufacturers,  and  merchants, 
whom  they  styled  the  unproductive  class.  That 
portion  of  his  income  which  the  landlord  laid 
out  in  the  improvement  of  his  land  they  char- 
acterized as  productive  expenses;  and  in  so  far 
as  the  landlord  by  these  expenditures  aided  the 
farmer  in  increasing  the  amount  of  his  produce, 
the  landlord  became  one  of  the  productive  class. 
They  maintained  that  the  labor  of  mechanics, 
manufacturers,  and  artisans  was  unproductive, 
because  it  merely  replaced  the  stock  Avliich 
employed  them,  together  with  the  ordinary 
profits  of  that  stock ; and  that  mercantile  stock 
was  unproductive  because  it  merely  continued 
the  existence  of  its  own  value.  They  admitted 
that  mechanics,  manufacturers,  and  merchants 
might  augment  the  revenue  and  wealth  of  so- 
ciety, but  that  it  could  only  be  accomplished 


by  parsimony  or  privation.  They  believed  that 
tlie  most  perfect  freedom  of  trade  with  all  na- 
tions was  the  great  desideratum  for  agricul- 
ture. Dissenting  entirely  from  the  central  idea 
of  this  school  and  its  logical  deductions,  Adam 
Smith,  in  1776,  expressed  the  opinion  that 
“ with  all  its  imperfections  it  is,  perhaps,  the 
nearest  approximation  to  the  truth  that  has  yet 
been  published  upon  the  subject  of  political 
economy.”  Among  the  most  eminent  of  the 
physiocratists  was  Turgot,  afterward  comptrol- 
ler general  of  finances,  who  early  embraced  the 
views  of  Quesnay,  and  in  1771  published  Re- 
flexions sur  la  formation  et  la  distribution  des 
richesses^  the  ablest  of  the  treatises  of  this 
school. — A Spanish  treatise  well  worthy  of  at- 
tention is  “ The  Theory  and  Practice  of  Com- 
merce and  Maritime  Affairs,”  by  Geronimo 
de  Ustariz  (Madrid,  1724  ; English,  2 vols., 
1751).  “ Though  imbued  with  the  prejudices 

of  the  mercantile  system,”  says  McCulloch,  “ it 
is  valuable  for  the  information  it  affords  re- 
specting the  internal  policy,  trade,  and  state  of 
Spain  from  the  reign  of  Charles  V.  down- 
ward.” Montesquieu’s  Be  V esprit  des  lois  (Ge- 
neva, 1748)  is  worthy  of  note  in  the  history 
of  political  economy,  on  account  of  its  refer- 
ence to  such  subjects,  particularly  in  regard 
to  foreign  commerce,  taxes,  public  debts,  and 
money.  His  theory  of  money  very  closely  re- 
sembles the  views  of  Hume  upon  the  subject, 
which  are  now  held  by  so  many  economists. 
— Among  the  contributions  to  political  econ- 
omy up  to  the  end  of  the  18th  century,  none 
evince  greater  reasoning  power  than  the  “ Po- 
litical Discourses”  of  David  Hume  (1752). 
Among  those  essays  w'hich  come  within  the 
limit  of  political  economy  are  “ Commerce,” 
“Refinements  in  the  Arts,”  “Money,”  “Inter- 
est,” “ The  Balance  of  Trade,”  “ The  Jealousy 
of  Trade,”  “ Taxes,”  and  “ Public  Credit.”  Ac- 
cording to  the  doctrines  of  these  essays,  every- 
thing in  the  world  is  purchased  by  labor,  and 
our  passions  are  the  only  causes  of  labor; 
when  a nation  abounds  in  manufactures  and 
the  mechanic  arts,  scientific  agriculture  becomes 
possible,  and  the  cultivators  of  the  soil  re.double 
their  industry  and  attention,  the  surplus  pro- 
duce being  readily  exchanged  for  the  products 
of  those  manufactures  and  mechanic  arts,  and 
the  land  furnishes  more  than  is  needed  for  the 
support  of  those  who  cultivate  it ; while  on 
the  other  hand,  where  this  diversified  industry 
does  not  flourish,  there  is  no  inducement  for 
the  agriculturists  to  increase  their  skill  and 
industry,  because  of  the  difficulty  of  exchanging 
any  surplus.  Foreign  trade  by  its  imports  fur- 
nishes raw  materials  for  new  manufactures, 
and  by  its  exports  gives  employment  to  labor, 
which  in  the  absence  of  this  trade  might  be 
wasted.  Necessity  is  the  great  incentive  to 
industry  and  invention — rather  the  fears  than 
tlie  hopes,  the  aspirations,  and  the  ambition  of 
mankind.  Money  Hume  considers  not  properly 
one  of  the  subjects  of  commerce,  but  “ only 
the  instrument  which  men  have  agreed  upon 


6 


POLITICAL  ECONOMY 


to  facilitate  the  exchange  of  one  commodity 
for  another.”  He  holds  to  the  idea  that  “ an 
increase  in  the  amount  of  money  in  a country 
is  rather  inconvenient  than  advantageous,  the 
influence  which  it  exerts  being  to  heighten  the 
price  of  commodities,  and  oblige  every  one 
to  pay  a greater  number  ©f  these  little  yellow 
or  white  pieces  for  everything  he  purchases.” 
But  he  did  not  fail  to  observe  in  actual  expe- 
rience an  apparent  departure  from  the  course 
here  laid  down.  He  had  been  led  to  notice 
that  ‘‘  in  every  kingdom  into  which  money 
begins  to  flow  in  greater  abundance  than  for- 
merly, everything  takes  a new  face  ; labor  and 
industry  gain  life  ; the  merchant  becomes  more 
diligent  and  skilful,  and  even  the  farmer  fol- 
lows his  plough  with  greater  alacrity  and  at- 
tention.” He  then  enters  into  a series  of  rea- 
sonings to  show  that  it  is  not  immediately  upon 
the  receipt  of  this  money  into  a country  that 
a rise  in  prices  takes  place,  but  that  “ some 
time  is  required  before  the  money  circulates 
through  the  whole  state,  and  makes  its  effects 
felt  on  all  ranks  of  the  people.”  The  rate 
of  interest,  he  holds,  “ is  not  derived  from  the 
quantity  of  the  precious  metals,”  but  “ high  in- 
terest arises  from  three  circumstances  : a great 
demand  for  borrowing,  little  riches  to  supply 
that  demand,  and  great  profits  arising  from 
commerce.”  “ I should  as  soon  dread,”  he 
adds,  “ that  all  the  springs  and  rivers  should 
be  exhausted,  as  that  money  should  abandon 
a kingdom  where  there  are  people  and  indus- 
try.” While  deprecating  as  unwise  and  illib- 
eral all  “ those  numberless  bars,  obstructions, 
and  imposts,”  which  nations  have  laid  with  the 
object  of  retaining  the  precious  metals,  he  says 
that  “ all  taxes  upon  foreign  commodities  are 
not  to  be  regarded  as  prejudicial  or  useless, 
but  those  only  which  are  founded  upon  the 
jealousy”  of  the  balance  of  trade.  “A  tax  on 
German  linen  encourages  home  manufactures, 
and  thereby  multiplies  our  people  and  indus- 
try. A tax  on  brandy  increases  the  sale  of  rum 
and  supports  our  southern  colonies.” — Among 
the  earliest  of  the  systematic  books  on  politi- 
cal economy  must  be  included  Lezioni  di  com- 
mercio,  o di  economia  civile^  by  the  Abate  An- 
tonio Genovesi  (2  vols.,  Naples,  1757).  In  the 
opinion  of  McCulloch,  it  “is  one  of  the  best 
that  has  been  written  on  the  narrow  and  hol- 
low principles  of  the  mercantile  system ;”  hut 
the  denunciation  here  implied  should  be  taken 
with  much  allowance  for  McCulloch’s  preju- 
dices. The  book  is  celebrated,  and  has  often 
been  reprinted. — In  1767  appeared  in  London 
“ An  Inquiry  into  the  Principles  of  Political 
Economy,  being  an  Essay  on  the  Science  of 
Domestic  Policy  in  Free  Nations,”  by  Sir  James 
Steuart,  a countryman  of  Hume.  This  was  the 
largest  and  most  elaborate  book  on  the  sub- 
ject which  had  then  been  written  in  English. 
It  treats  in  detail  of  population,  agriculture, 
trade,  industry,  money,  coin,  credit,  debts,  in- 
terest, banks,  exchange,  public  credit,  and 
taxes.  Economy  in  general  Stciuirt  defines  as 


the  art  of  providing  for  all  the  wants  of  a 
family  with  prudence  and  frugality.  Political 
economy  he  regards  as  an  art,  and  also  a sci- 
ence ; and  among  its  important  objects  are 
“ to  provide  everything  necessary  for  supply- 
ing the  wants  of  society,  and  to  employ  the 
inhabitants  in  such  a manner  as  naturally  to 
create  reciprocal  relations  and  dependencies, 
so  as  to  make  their  several  interests  lead  them 
to  supply  one  another  with  their  reciprocal 
wants.”  Population  he  considers  limited  by 
the  amount  of  food  produced,  and  “ that  when 
too  many  of  a society  propagate,  a part  must 
starve.”  He  holds  that  if  a nation  would  aim 
to  be  continuously  gi-eat  and  powerful  by  trade, 
she  must  first  apply  closely  to  the  manufac- 
turing of  every  natural  product  of  the  country; 
and  that  when  a people  find  the  balance  of 
trade  to  be  against  them,  it  is  to  their  interest 
to  take  such  measures  as  will  correct  the  evil. 
He  attacks  the  theory  of  Locke  and  Hume 
respecting  the  effect  of  an  increased  volume 
in  the  circulating  medium  upon  prices.  He 
argues  that,  while  the  wealth  of  a country  un- 
doubtedly exerts  an  influence  upon  the  prices 
of  certain  commodities,  prices  are  really  reg- 
ulated by  “ the  complicated  operations  of  de- 
mand and  competition  ;”  and  that  when  Hume 
says  that  “ the  price  of  every  commodity  is  in 
proportion  to  the  sum  of  money  circulating*  in 
the  market  for  that  commodity,”  it  really  means 
that  the  money  to  be  employed  in  the  purchase 
of  it  is  a measure  of  the  demand  for  it ; and  it 
in  no  wise  interferes  with  Steuart’s  own  propo- 
sition respecting  the  operation  of  supply,  which 
is  fundamental.  In  1772,  at  the  request  of  the 
East  India  company,  the  same  author  prepared 
“ The  Principles  of  Money  as  applied  to  the 
Coin  of  Bengal,”  in  many  respects  a very  able 
treatise. — In  1776  appeared  in  London  the  first 
edition  of  the  great  work  of  Adam  Smith, 
destined  to  exert  so  decided  an  influence  on 
political  economy  and  legislation  : “ An  Inqui- 
ry into  the  Nature  and  Causes  of  the  Wealth 
of  Nations.”  This  remarkable  book  treats 
“ of  the  causes  of  improvement  in  the  produc- 
tive powers  of  labor,  and  the  order  according 
to  which  its  produce  is  naturally  distributed 
among  the  different  ranks  of  the  people ; of 
the  nature,  accumulation,  and  employment  of 
stock  ; of  systems  of  political  economy;  of  the 
revenue  of  the  sovereign  or  commonwealth.” 
Dr.  Smith  holds  that  the  annual  labor  of  every 
nation  is  the  fund  which  originally  supplies  it 
with  what  it  annually  consumes,  and  that  the 
relative  proportion  which  that  produce  bears 
to  the  consumers  is  the  measure  of  their  sup- 
ply in  the  necessaries  and  conveniences  of  life ; 
that  the  greatest  improvement  in  the  produc- 
tive power,  skill,  and  judgment  of  labor  has 
arisen  from  the  division  of  labor ; that  the  ex- 
tent of  the  division  of  labor  is  limited  by  the 
market  for  its  products;  and  that  labor  is  the 
only  universal  as  well  as  accurate  measure  of 
value,  or  the  only  standard  by  which  we  can 
compare  the  values  of  different  commodities  at 


POLITICAL  ECONOMY 


7 


all  times  and  in  all  places.  He  says  that  the 
demand  for  labor  can  only  increase  in  propor- 
tion to  the  increase  of  the  “funds  destined  for 
the  payment  of  wages;”  and  yet,  while  justly 
holding  that  it  is  labor  which  supplies  a people 
with  what  they  consume,  he  says  that  “ the 
attention  of  government  never  was  so  unne- 
cessarily employed  as  when  directed  to  watch 
over  the  preservation  or  increase  of  the  quan- 
tity of  money  in  any  country.”  In  his  com- 
plicated arguments  respecting  “stock” — which 
he  says  consists  of  two  parts,  that  which  the 
possessor  “expects  is  to  afford  him  revenue,” 
which  “is  called  his  capital,”  and  also  that 
which  supplies  his  “ immediate  consumption  ” 
— he  involves  himself  in  some  of  the  most 
serious  fallacies  to  be  found  in  his  book,  the 
deductions  from  which  are  fatal  to  much  of 
his  system.  Money  he  terms  “the  great  wheel 
of  circulation,  the  great  instrument  of  com- 
merce,” and  adds  that  it  “makes  a part  and  a 
very  valuable  part  of  the  capital  ” of  a coun- 
try or  people,  and  that  when  possessed  of  it 
we  can  readily  obtain  whatever  else  we  have 
occasion  for.  “ The  great  affair  is  to  get 
money ; when  that  is  obtained,  there  is  no  dif- 
ficulty in  making  any  other  purchase.”  Here, 
it  will  be  observed,  he  recognizes  the  impor- 
tant fact  that  money  possesses  a quality  not 
to  be  found  in  any  other  commodity  : its  uni- 
versal acceptability  among  men,  its  power  to 
purchase  anything  Avhich  man  desires  to  sell. 
In  tracing  the  general  progress  of  wealth,  he 
illustrates  the  importance  of  the  diversification 
of  industry  to  the  farmer  as  follows:  “An  in- 
land country  naturally  fertile  and  easily  culti- 
vated produces  a great  surplus  of  provisions 
beyond  what  is  necessary  for  maintaining  the 
cultivators ; and  on  account  of  the  expense 
of  land  carriage,  and  inconveniency  of  river 
navigation,  it  may  frequently  he  difficult  to 
send  this  surplus  abroad.”  When  then  work- 
men engaged  in  other  pursuits  settle  in  the 
neighborhood,  “they  work  up  the  materials 
of  manufacture  which  the  land  produces,  and 
exchange  finished  work”  “or  the  price  of  it 
for  more  materials  and  provisions.”  “ They 
give  a new  value  to  the  surplus  part  of  the 
rude  produce,  by  sa^dng  the  expense  of  carry- 
ing it  to  the  water  side,  or  to  some  differ- 
ent market ; and  they  furnish  the  cultivators 
with  something  in  exchange  for  it  that  is 
either  useful  or  agreeable  to  them,  upon  easier 
terms  than  they  could  have  obtained  it  before. 
. . . They  are  thus  both  encouraged  and  en- 
abled to  increase  this  surplus  produced  by  a 
further  improvement  and  better  cultivation  of 
the  land;  and  as  the  fertility  of  the  land  had 
given  birth  to  the  manufacture,  so  the  prog- 
ress of  the  manufacture  reacts  upon  the  land, 
and  increases  the  fertility.”  As  the  work 
improves,  more  distant  markets  are  reached ; 
“ for  though  neither  the  rude  produce,  nor 
even  the  coarse  manufacture,  could  without 
the  greatest  difficulty  support  the  expense  of 
a considerable  land  carriage,  the  refined  and 


improved  manufacture  easily  may.  In  a small 
bulk  it  frequently  contains  the  price  of  a great 
quantity  of  rude  produce.”  With  all  its  in- 
consistencies, few  books  have  exerted  so  great 
an  influence  upon  the  affairs  of  mankind. — In 
1798  appeared  anonymously  “An  Essay  on  the 
Principle  of  Popula^on  as  it  affects  the  Future 
Improvement  of  Society,”  the  author  of  which 
w-as  the  Eev.  T.  11.  Malthus.  New  revised 
and  enlarged  editions  have  since  been  pub- 
lished with  the  name  of  the  author,  the  sixth 
in  1826.  According  to  its  preface,  this  pub- 
lication “ owes  origin  to  a conversation  with 
a friend  on  the  subject  of  William  Godwin’s 
essay  on  avarice  and  profusion  in  his  ‘In- 
quirer.’ ” In  addition  to  an  examination  of 
the  principle  of  population,  and  as  a part  of 
his  subject,  Malthus  reviews  the  doctrines  of 
Godwin  as  well  as  those  of  Condorcet,  both  of 
whom  held  to  the  possible  progress  of  man 
toward  future  perfection,  and  a consequent 
reign  of  equality,  peace,  and  justice.  Impress- 
ed with  the  force  of  Godwin’s  protest  against 
the  defects  and  failures  of  the  existing  social 
organization,  in  the  essay  above  referred  to 
and  in  his  “Inquiry  concerning  Political  Jus- 
tice ” (1793),  respecting  the  unequal  distribu- 
tion of  property,  Malthus  aimed  to  overthrow 
it  by  presenting  evidence  that  the  inequality 
among  mankind  was  due  to  a natural  law.  His 
principle  is  that  “population  when  unchecked 
increases  in  a geometrical  ratio,  while  subsis- 
tence increases  only  in  an  arithmetical  ratio ;” 
or,  practically  stated,  that  “in  two  centuries 
the  population  would  be  to  the  means  of  sub- 
sistence as  256  to  9,  in  three  centuries  as  4,096 
to  13,  and  in  2,000  years  the  difference  would 
be  almost  incalculable.”  He  does  little  more 
than  state  his  proposition,  when,  almost  with- 
out presenting  proof  in  regard  to  the  actual 
power  of  increase  in  man  and  food  respective- 
ly, he  proceeds  to  show  what  have  been  the 
checks  to  increase  of  population  throughout 
the  various  countries  of  the  world.  Popula- 
tion, he  holds,  “is  necessarily  limited  by  the 
means  of  subsistence,”  and  “invariably  in- 
creases where  those  means  increase,  unless 
prevented  by  some  very  powerful  and  obvious 
check.”  These  checks  he  divides  into  the 
positive  and  the  preventive.  The  former  “in- 
clude every  cause,  whether  arising  from  vice 
or  misery,  which  in  any  degree  contributes  to 
shorten  the  natural  duration  of  human  life,” 
among  which  maybe  enumerated  “unwhole- 
some occupations,  severe  labor,  exposure  to 
the  seasons,  extreme  poverty,  bad  nursing  of 
children,  great  towns,  excesses  of  all  kinds,  the 
whole  train  of  common  diseases,  and  epidem- 
ics, wars,  plagues,  and  famine.”  The  pre- 
ventive checks  include  abstinence  from  mar- 
riage and  sexual  intercourse  from  considera- 
tions of  prudence,  and  all  vice  and  immorality 
tending  to  render  women  unprolific.  Few 
books  have  formed  the  subject  of  greater  dis- 
cussion and  controversy  than  this;  and  it  is 
difficult  to  say  whether  among  economic  wri- 


8 


POLITICAL  ECONOMY 


ters  those  who  do  or  who  do  not  now  accept 
its  doctrines  form  the  larger  number.  Yet  it 
must  be  acknowledged  that  these  doctrines 
have  taken  a hold  upon  the  minds  of  men 
which  it  is  difficult  to  shake  off.  According 
to  Prof.  E.  E.  Thompson,  Malthus’s  main 
position  was  anticipated  by  Herrenschwand 
in  his  Discours  fondamental  sur  la  population 
(1786).  In  1820  Godwin  published  his  work 
“On  Population,  an  Inquiry  concerning  the 
Power  of  Increase  in  the  Numbers  of  Mankind, 
being  an  Answer  to  Mr.  Malthus’s  Essay  on 
that  Subject.”  The  “ Inquiry  ” comprises  a 
careful  examination  of  the  progress  of  popula- 
tion throughout  the  world,  and  of  the  causes 
which  tend  to  prevent  its  increase,  of  the 
means  of  subsistence  of  man,  and  a review  of 
Malthus’s  doctrines  from  a moral  as  well  as  a 
philosophical  standpoint.  Godwin  gives  as  his 
reason  for  producing  his  book,  that  Malthus 
had  said  in  his  preface  that  the  “ Essay  on 
Population  ” was  indebted  to  his  writings  for 
its  existence ; and  as  “ it  still  holds  on  its  pros- 
perous career,”  “I  cannot  consent,”  he  adds, 
“to  close  my  eyes  for  ever,  with  the  judg- 
ment, as  the  matter  now  seems  to  stand,  re- 
corded on  my  tomb,  that  in  attempting  one 
further  advance  in  the  route  of  improvement, 
I should  have  brought  on  the  destruction  of  all 
that  Solon,  and  Montesquieu,  and  Sidney  . . . 
had  seemed  to  have  effected  for  the  redemption 
and  the  elevation  of  mankind.”  He  says  that 
Malthus’s  book  had  then  been  before  the  public 
20  years  without  any  one,  so  far  as  he  knew, 
attempting  a refutation  of  his  main  principle. 
One  of  the  most  detailed  examinations  of  the 
work  of  Malthus  which  have  been  published 
is  “ The  Law  of  Population,”  by  Michael 
Thomas  Sadler,  M.  P.  (London,  1830).  In  ad- 
dition to  an  elaborate  answer  to  Malthus’s 
theory,  Mr.  Sadler  develops  a doctrine  of  popu- 
lation. “The  prolificness  of  human  beings,” 
he  says,  “ otherwise  similarly  circumstanced, 
varies  inversely  as  their  numbers and  he  pre- 
sents a mass  of  evidence  to  prove  that  nature 
has  not  “ invested  man  with  a fixed  and  un- 
varying measure  of  prolificness,”  but  that  the 
Creator  has  “ regulated  the  prolificness  of  his 
creatures  in  reference  to  the  circumstances  in 
which  his  providence  shall  place  them,  instead 
of  leaving  that  regulation  to  the  busy,  selfish, 
and  ignorant  interference  of  men.”  In  arti- 
cles published  in  July,  1830,  and  January,  1831, 
and  now  included  in  the  collection  of  his  es- 
says, Macaulay  attacked  Sadler’s  book  with 
much  severity,  and  at  the  same  time  indicated 
unmistakably  his  belief  in  the  doctrines  of 
Malthus.  The  Kev.  Thomas  Chalmers,  D.  D., 
who  had  thoroughly  imbibed  these  doctrines, 
published  a volume  on  “Political  Economy  in 
connection  with  the  Moral  State  and  Moral 
Prospects  of  Society  ” (Glasgow,  1832).  Fear- 
ing “ a sweeping,  headlong  anarchy,”  he  aimed 
to  present  the  evidence  of  the  “ tremendous 
evil”  of  over  population,  and  at  the  same  time 
to  appeal  to  his  countrymen  to  take  steps  to 


“avert  it  from  their  borders.”  In  1840  ap- 
peared in  Edinburgh  “The  Principles  of  Pop- 
ulation, and  their  Connection  with  Human 
Happiness,”  by  Archibald  Alison  (2  vols. 
8vo),  the  first  draft  of  which,  says  the  au- 
thor, was  composed  in  1809  and  1810,  while 
the  treatise  was  rewritten  between  1819  and 
1828.  This  book  is  wonderfully  rich  in  facts 
and  illustrations,  and  deduces  a "theory  of  self- 
adjustment in  the  power  of  increase  in  popula- 
tion which  may  be  briefly  stated  as  follows : 
There  is  a rapid  increase  of  numbers  in  the 
early  stages  of  society,  a gradual  retardation 
as  society  advances,  and  an  ultimate  stationary 
condition  in  its  last  stages.  It  need  hardly  be 
added  that  Mr.  Alison  is  an  uncompromising 
adversary  of  Malthus,  and  that  he  sees  nothing 
in  this  question  which  can  give  any  cause  for 
alarm  for  the  future  of  mankind  upon  the 
earth.  In  1841  Thomas  Doubleday  published 
in  London  “ The  true  Law  of  Population  shown 
to  be  connected  with  the  Food  of  the  People  ” 
(new  ed.,  1854),  in  which  he  undertakes  to  de- 
monstrate that  “ whenever  a species  or  genus 
is  endangered,  a corresponding  effort  is  inva- 
riably made  by  nature  for  its  preservation  and 
continuance,  by  an  increase  of  fecundity  or  fer- 
tility ; and  that  this  especially  takes  place  when- 
ever such  danger  arises  from  a diminution  of 
proper  nourishment,”  and  that  consequently 
“ the  deplethoric  state  is  favorable  to  fertili- 
ty, and  that  on  the  other  hand  the  plethoric 
state  is  unfavorable  to  fertility.”  Thus  “ there 
is  in  all  societies  a constant  increase  going  on 
among  that  portion  of  it  which  is  the  worst 
supplied  with  food ; in  short,  among  the  poor- 
est.” “The  Westminster  Eeview  ” for  April, 
1852,  contains  “ A New  Theory  of  Popula- 
tion,” understood  to  be  by  Herbert  Spencer, 
deduced  from  the  general  laAv  of  animal  fer- 
tility. It  argues  that  an  antagonism  exists  be- 
tween individuation  and  reproduction;  that 
matter  in  its  lower  forms,  that  of  vegetables 
for  instance,  possesses  a stronger  power  of 
increase  than  in  all  higher  forms ; that  the 
capacity  of  reproduction  in  animals  is  in  an 
inverse  ratio  to  their  individuation ; that  the 
ability  to  maintain  individual  life  and  that  of 
multiplication  vary  in  the  same  manner  also. 
He  further  demonstrates  that  “the  ability  to 
maintain  life  is  in  all  cases  measured  by  the 
development  of  the  nervous  system.”  In 
Spencer’s  “Principles  of  Biology”  the  doc- 
trines here  stated  have  been  further  elaborated 
and  illustrated.  “ Population  and  Capital,” 
consisting  of  lectures  delivered  before  the  uni- 
versity of  Oxford  in  1853-’4,  by  George  K. 
Rickards  (London,  1854),  contends  by  careful 
induction  from  facts  that  the  trutli  is  the  very 
reverse  of  Malthus’s  theory;  “that  the  pro- 
ductive power  of  a community  tends  to  increase 
more  rapidly  than  the  number  of  its  inhabi- 
tants.” W.  R.  Greg,  in  “Enigmas  of  Life” 
(London,  1872),  has  taken  issue  with  Malthus, 
and  says  one  influence  tending  to  reduce  the 
rate  of  increase  “ may  be  specified  with  con- 


POLITICAL  ECOTOMY 


9 


siderable  confidence,  namely,  the  tendency  of 
cerebral  development  to  lessen  fecundity,”  and 
approvingly  cpiotes  Herbert  Spencer’s  views. 
But  lie  says  that  some  years  ago  he  had  hoped 
to  be  able  to  show  that  Maltlms’s  premises 
were  imperfect  and  his  conclusions  in  conse- 
quence unsound.  “ It  is  with  sadness,”  he  adds, 
“ 1 am  now  compelled  to  admit  that  further 
investigation  and  deeper  thought  have  shaken 
this  confidence.  I now  only  venture  to  suggest 
as  eminently  probable  what  I once  fancied  I 
could  demonstrate  to  be  certain.” — Probably 
no  work  on  political  economy  has  been  more 
extensively  read  or  studied,  or  has  exerted  a 
larger  influence  in  the  formation  of  opinions 
in  the  United  States  at  least,  than  Jean  Bap- 
tiste Say’s  “Treatise  on  Political  Economy, 
or  the  Production,  Distribution,  and  Con- 
sumption of  Wealth”  (Paris,  1803;  6th  ed., 
1841).  This  treatise  is  in  form  the  most  scien- 
tific and  methodical  which  at  the  time  of  its 
publication  had  appeared  in  any  language. 
“If,”  says  Say,  “ we  take  the  pains  to  inquire 
what  that  is  which  mankind  in  a social  state 
of  existence  denominates  wealth,  we  shall  find 
the  term  employed  to  designate  an  indefinite 
quantity  of  objects  bearing  inherent  value,  as 
of  land,  of  metal,  of  coin,  of  grain,  of  stuffs,  of 
commodities  of  every  description.  When  its 
signification  is  further  extended  to  landed  se- 
curities, bills,  notes  of  hand,  and  the  like,  it  is 
evidently  because  they  contain  obligations  to 
deliver  things  possessed  of  inherent  value.  In 
point  of  fact,  wealth  can  only  exist  where  there 
are  things  possessed  of  real  and  intrinsic  value. 
Wealth  is  proportionate  to  the  quantum  of  that 
value ; great  when  the  aggregate  of  component 
value  is  great,  small  when  that  aggregate  is 
small.  . . . The  knowledge  of  the  real  nature 
of  wealth,  thus  defined,  of  the  difficulties  that 
must  be  surmounted  in  its  attainment,  of  the 
course  and  order  of  its  distribution  among  the 
members  of  society,  of  the  uses  to  which  it  may 
be  applied, , and  further,  of  the  consequences 
resulting  respectively  from  these  several  cir- 
cumstances, constitute  that  branch  of  science 
now  entitled  political  economy.”  Subsequent- 
ly Say  published  his  lectures  on  the  applica- 
tion of  the  science,  under  the  title  of  Coiirs 
complet  d?econow.ie  politique  pratique^  suivi 
de  melanges  (6  vols.,  Paris,  1828-’30;  3d  ed., 
edited  by  Horace  Say,  1852).  An  examination 
of  this  book  will  show  that  he  had  materially 
altered  his  views,  and  was  now  disposed  to  treat 
political  economy  as  something  higher  and 
better  than  a mere  science  of  wealth.  “ The 
object  of  political  economy,”  he  says  in  this 
later  book,  “ seems  heretofore  to  have  been 
restricted  to  the  knowledge  of  the  laws  which 
govern  the  production,  distril)ution,  and  con- 
sumption of  riches.  And  it  is  so  that  I have 
considered  it  in  my  treatise  upon  political 
economy,  published  first  in  1803;  yet  in  that 
same  work  it  can  be  seen  that  the  science  per- 
tains to  everything  in  society.”  In  the  same 
year  in  which  Say’s  first  treatise  appeared, 


Sismondi  published  in  Geneva  his  Traite  de 
la  rich  esse  commerciale.  At  this  time  Sis- 
mondi was  a decided  follower  of  Adam  Smith  ; 
“but,”  says  Colwell,  “being  an  ardent  friend 
of  humanity,  his  views  underwent  a complete 
change  in  the  progress  of  his  investigations. 
No  more  pleasing  task  could  be  offered  us 
than  turning  through  the  voluminous  works 
of  Sismondi  for  the  evidences  of  his  pure  love 
of  human  welfare,  and  his  detestation  of  the 
science  of  v'ealth  apart  from  human  well-be- 
ing.”— At  the  request  of  Alexander  1.  of  Kus- 
sia  H.  Storch  prepared  his  Cours  d^economie 
politiq'iie^  ou  exposition  des  principcs  qui  de- 
terminent  la qorosph'ite  des  nations  (St.  Peters- 
burg, 1815).  “The  emperor  Alexander,  hav- 
ing taken  his  lessons  in  political  economy  from 
M.  Storch,”  says  Carey,  “determined  to  carry 
out  in  the  administration  of  the  empire  the 
lessons  he  had  learned  in  the  closet ; but  the 
result  proved  most  disastrous.  British  goods 
flowed  in  in  a constant  stream,  and  Knssian 
gold  flowed  out;  and  the  government  was  par- 
alyzed, while  the  manufacturers  were  ruined. 
. . . Count  Nesselrode  issued  a circular  prelim- 
inary to  a change  of  system,  in  w hich  it  was 
declared  that  Kussia  found  herself  forced  to 
resort  to  a system  of  independent  commerce; 
that  the  products  of  the  empire  no  longer  found 
markets  abroad ; that  the  manufactures  of  the 
country  w^ere  exceedingly  depressed ; that  the 
coin  of  the  country  was  rapidly  floAving  out  to 
distant  nations;  that  the  most  solid  mercantile 
establishments  had  become  endangered ; and 
that  agriculture  and  commerce  as  well  as  manu- 
facturing industry  w^ere  not  only  paralyzed,  but 
had  been  brought  to  the  brink  of  ruin.”  In 
1824  Kussia  again  imposed  heavier  duties  in 
opposition  to  the  theories  of  Storch. — “ The 
Principles  of  Political  Economy  and  Taxation,” 
by  David  Ricardo,  appeared  in  London  in  1817 
(3d  ed.,  1821).  The  most  noted  doctrines  of 
this  wmrk  are  the  theory  of  rent  and  the  con- 
sequent theory  of  value.  The  former,  Avith 
Avhich  the  name  of  Ricardo  is  noAv  ahvays  as- 
sociated, Avas  announced  in  1777  by  James  An- 
derson, a Scotchman,  in  a tract  entitled  “An 
Inquiry  into  the  Nature  of  the  Corn  LaAvs;” 
and  it  seems  to  have  been  so  completely  over- 
looked and  forgotten,  that  “ Avhen  in  1815,’' 
says  an  English  economist,  “Mr.  Malthus  and 
Sir  Edward  West  published  their  tracts  exhib- 
iting the  nature  and  progress  of  rent,  they  were 
universally  believed  to  have  for  the  first  time 
discovered  the  laws  by  Avhich  it  is  governed.” 
The  theories  of  rent  and  value,  abridged  from 
Ricardo’s  own  statement,  are  as  follows:  On 
the  first  settling  of  a country  in  which  there 
is  an  abundance  of  rich  and  fertile  land,  there 
Avill  be  no  rent;  for  no  one  Avould  pay  for 
the  use  of  land  Avhen  there  Avas  an  abundant 
quantity  not  yet  appro])riated.  If  all  land 
had  the  same  properties,  if  it  Avere  boundless 
in  quantity  and  uniform  in  quality,  no  charge 
could  be  made  for  its  use,  unless  Avhere  it  pos- 
sessed peculiar  advantages  of  situation.  It  is 


10 


POLITICAL  ECONOMY 


only  then  because  land  is  not  unlimited  in 
quantity  and  uniform  in  quality,  and  because 
in  the  progress  of  population  land  of  an  infe- 
rior quality  or  less  advantageously  situated  is 
called  into  cultivation,  that  rent  is  ever  paid 
for  the  use  of  it.  When  in  the  progress  of 
society  land  of  the  second  degree  of  fertility 
is  taken  into  cultivation,  rent  immediately 
commences  on  that  of  the  first  quality;  and 
the  amount  of  that  rent  will  depend  on  the 
difference  in  the  quality  of  these  two  portions 
of  land.  When  land  of  the  third  quality  is 
taken  into  cultivation,  rent  immediately  com- 
mences on  the  second,  and  it  is  regulated  as 
before  by  the  difference  in  their  respective 
productive  powers.  At  the  same  time  the  rent 
of  the  land  of  the  first  quality  will  rise,  for 
that  must  always  be  above  the  rent  of  the 
second,  by  the  difference  between  the  produce 
which  they  yield  with  a given  quantity  of  cap- 
ital and  labor.  “ The  most  fertile  and  favora- 
bly situated  land  will  be  first  cultivated,  and 
the  exchangeable  value  of  its  produce  will  be 
adjusted  in  the  same  manner  as  the  exchange- 
able value  of  all  other  commodities,  by  the 
total  quantity  of  labor  necessary  in  various 
forms,  from  first  to  last,  to  produce  it,  and 
bring  it  to  market.  When  land  of  an  inferior 
quality  is  taken  into  cultivation,  the  exchange- 
able value  of  raw  produce  will  rise,  because 
more  labor  is  required  to  produce  it.”  “ This,” 
says  one  of  Eicardo’s  followers,  “is  the  fun- 
damental theorem  of  the  science  of  value,  and 
the  clue  which  unravels  the  laws  that  regu- 
late the  distribution  of  wealth.”  By  reason  of 
these  theories  of  rent  and  value,  if  in  accor- 
dance with  the  facts,  the  landlord  would  be  en- 
abled to  command  a steadily  increasing  rent  as 
the  yield  per  acre  declined,  until  he  absorbed 
the  entire  product  of  the  land  ; and  food  would 
as  steadily  increase  in  cost  as  population  in- 
creased. Starvation  and  wretchedness  could 
not  fail  to  be  the  lot  of  the  mass  of  mankind 
under  such  a condition  of  things.  These  theo- 
ries seemed  to  aid  in  accounting  for  the  Mal- 
thusian principle  of  population,  and  they  at 
once  took  their  positions  as  logically  anterior 
to  that  doctrine,  and  became  the  foundation 
of  the  system  now  known  as  Eicardo-Malthu- 
sianism. — In  1825  Samuel  Bailey,  author  of 
“ Essays  on  the  Formation  and  Publication  of 
Opinions,”  published  “ xi  Critical  Dissertation 
on  the  Nature,  Measure,  and  Causes  of  Value,” 
in  which  he  attacked  Ricardo’s  theory  of  value. 
In  1821-’2  James  Mill  published  “Elements  of 
Political  Economy,”  which  is  to  some  extent 
a statement  and  abstract  elaboration  of  some 
of  the  doctrines  of  Adam  Smith  and  Ricardo 
in  regard  to  production  and  distribution,  and  i 
those  of  Malthus  respecting  population. — One 
of  the  most  Avidely  known  writers  on  political 
economv  and  statistics  for  the  last  generation 
was  J.  R.  McCulloch,  Avho  prepared  the  article 
for  the  supplement  to  the  “Encyclopaedia  Bri- 
tannica,”  a separate  e'lition  of  which  appeared 
in  1825,  and  which  has  since  passed  through 


several  editions,  the  last  in  1864  under  the 
title  of  “ The  Principles  of  Political  Economy, 
Avith  some  Inquiries  respecting  their  Appli- 
cation, and  a Sketch  of  the  Rise  and  Progress 
of  the  Science.”  “ McCulloch,”  says  Colwell, 
“ belongs  neither  to  the  school  of  Say,  nor  to 
the  still  more  refined  and  strict  school  of  Tracy, 
Rossi,  and  Senior.  He  persists  in  considering 
all  the  topics  of  political  economy  from  a prac- 
tical point  of  view.  He  speaks  of  a science, 
it  is  true,  but  only  in  that  popular  sense  in 
which  men  speak  of  the  science  of  politics, 
which  is  a very  different  sense  from  that  in 
which  it  is  employed  by  Rossi,  Senior,  and  J. 
S.  Mill.” — In  the  “ Encylopaedia  Metropoli- 
tana”  in  1835,  and  subsequently  in  a separate 
form,  appeared  “ Political  Economy  ” by  Nas- 
sau W.  Senior,  professor  in  the  university  of 
Oxford  ; the  subject  being,  by  the  plan  of  the 
“Encyclopaedia,”  classed  as  among  the  pure 
sciences.  But  the  author  of  this  treatise  failed 
to  confine  his  investigations  strictly  Avithin 
these  bounds.  “We  propose  in  the  following 
treatise,”  he  says  in  opening,  “to  give  an  out- 
line of  the  science  which  treats  of  the  nature, 
the  production,  and  the  distribution  of  Avealth. 
To  that  science  Ave  give  the  name  of  political 
economy.”  He  insists  too  on  limiting  his  in- 
quiries to  these  subjects  as  the  only  true  and 
legitimate  ones,  and  adds  that  political  econo- 
my does  not  treat  of  “ happiness,  but  Avealth.” 
He  even  declines  to  examine  into  the  effects 
upon  society  of  the  possession  of  wealth,  what 
distribution  is  most  desirable,  or  what  are  the 
means  by  Avhich  any  peculiar  distribution  can 
be  carried  into  effect  by  legislation.  All  of 
these  questions  are  “ of  great  interest  and  diffi- 
culty, but  no  more  form  part  of  the  science  of 
political  economy,  in  the  sense  in  which  we 
use  that  term,  than  navigation  forms  part  of 
the  science  of  astronomy.”  The  premises  of 
the  political  economist  he  regards  as  consist- 
ing “ of  a few  general  propositions,  the  result 
of  observation  or  consciousness,  and  scarcely 
requiring  proof  or  formal  statement,  which 
almost  every  man,  as  soon  as  he  hears  them, 
admits  as  familiar  to  his  thoughts,  or  at  least 
as  included  in  his  previous  knowledge ; and 
his  inferences  are  nearly  as  general,  and,  if  he 
has  reasoned  correctly,  as  certain  as  his  prem- 
ises.” The  fundamental  propositions  in  po- 
litical economy  Mr.  Senior  thus  states  : 1,  every 
man  desires  to  obtain  additional  Avealth  Avitli 
as  little  sacrifice  as  possible;  2,  the  population 
of  the  world,  or  in  other  Avords  the  number  of 
persons  inhabiting  it,  is  limited  only  b}”  moral 
and  physical  evil,  or  by  the  fear  of  a deficiency 
of  those  articles  of  Avealth  Avhich  the  habits  of 
the  individuals  of  each  class  of  its  inhabitants 
lead  them  to  require;  3,  the  poAvers  of  labor, 
and  of  the  other  instruments  Avhich  produce 
Avealth,  may  be  indefinitely  increased  by  using 
their  products  as  the  means  of  further  ])roduc- 
tion  ; 4,  agricultural  skill  remaining  the  same, 
additional  labor  employed  on  the  land  Avithin  a 
given  district  produces  in  general  a less  propor- 


POLITICAL  ECOJiTOMY 


11 


tionate  return  ; or  in  other  words,  though  with 
every  increase  of  the  labor  bestowed  the  aggre- 
gate return  is  increased,  the  increase  of  the  re- 
turn is  not  in  proportion  to  the  increase  of  la- 
bor. Mr.  Senior  belonged,  as  can  be  seen,  to  the 
school  of  Ricardo  and  Malthus,  and  believed 
with  them  in  the  limited  powers  of  the  earth, 
although  in  reality  he  took  issue  with  Malthus 
in  the  consideration  of  his  theory  of  population. 
— No  English  writer  on  political  economy  du- 
ring the  present  century  has  attracted  more 
attention  or  been  regarded  as  higher  author- 
ity than  John  Stuart  Mill.  He  defines  it  to 
be  ‘‘  the  science  which  treats  of  the  produc- 
tion and  distribution  of  wealth,  so  far  as  they 
depend  upon  the  laws  of  human  nature;  or 
the  science  relating  to  the  moral  or  psycho- 
logical laws  of  the  production  and  distribu- 
tion of  wealth.”  Again  he  says  ; “ Political 
economy  may  be  defined  as  follows,  and  the 
definition  seems  to  be  complete : The  science 
which  traces  the  laws  of  such  of  the  phe- 
nomena of  society  as  arise  from  the  combined 
operations  of  mankind  for  the  production  of 
wealth,  in  so  far  as  those  phenomena  are  not 
modified  by  the  pursuit  of  any  other  object.” 
Political  economy  is  “essentially  an  abstract 
science,”  and  its  method  “is  the  a 'prioriP 
“ It  reasons,”  he  contends,  and  “ must  ne- 
cessarily reason,  from  assumptions,  not  from 
facts.”  “ The  conclusions  of  political  econo- 
my, consequently,  like  those  of  geometry,  are 
only  true,  as  the  common  phrase  is,  in  the  ab- 
stract.” “That  which  is  true  in  the  abstract 
is  always  true  in  the  concrete  with  proper  al- 
lowances.” Not  only  “the  method  a p>'f'iori 
is  the  legitimate  mode  of  philosophical  investi- 
gation in  the  moral  sciences,”  but  “it  is  the 
only  mode.”  The  a posteriori  method,  or  that 
of  specific  experience,  “is  altogether  ineffica- 
cious,” although  it  may  be  “ usefully  applied 
in  aid  of  the  a priori?''  Therefore,  “ since  it 
is  vain  to  hope  that  truth  can  be  arrived  at, 
either  in  political  economy  or  in  any  other  de- 
partment of  the  social  science,  while  we  look 
at  the  facts  in  the  concrete,  clothed  in  all  the 
complexity  with  which  nature  has  surrounded 
them,  and  endeavor  to  elicit  a general  law  by 
a process  of  induction  from  a comparison  of 
details,  there  remains  no  other  method  than 
the  a priori  one,  or  that  of  abstract  specula- 
tion.” “ In  all  the  intercourse  of  man  with 
nature,”  proceeds  Mr.  Mill,  “ whether  we  con- 
sider him  as  acting  upon  it  or  as  receiving  im- 
pressions from  it,  the  effect  or  i)henomenon 
depends  upon  causes  of  two  kinds,  the  proper- 
ties of  the  object  acting  and  those  of  the  ob- 
ject acted  upon.  Everything  which  can  pos- 
sibly happen,  in  which  man  and  external  things 
are  jointly  concerned,  results  from  the  joint 
operation  of  the  law  or  laws  of  matter,  and 
the  law  or  laws  of  the  human  mind.”  “ There 
are  no  phenomena,”  he  continues,  “ which  de- 
pend exclusively  upon  the  laws  of  mind ; even 
the  phenomena  of  the  mind  itself  being  par- 
tially dependent  upon  the  physiological  laws 


of  the  body.”  Mr.  Mill  acknowledges  that 
“the  laws  of  the  production  of  objects  which 
constitute  wealth  are  the  subject  matter  both 
of  political  economy  and  of  almost  all  the 
physical  sciences;”  but  he  considers  that  po- 
litical economy  “presupposes  all  the  physical 
sciences,”  and  adds  that  “it  takes  for  granted 
that  the  physical  part  of  the  process  takes 
place  somehow.”  In  other  words,  it  matters 
not  to  political  economy  why,  how,  or  under 
what  circumstances  these  laws  of  matter  oper- 
ate. Mr.  Mill’s  design  in  writing  his  “Princi- 
ples of  Political  Economy  ” was  to  produce  “a, 
work  similar  in  its  object  and  general  concep- 
tion to  that  of  Adam  Smith ; to  exhibit  the 
economical  phenomena  of  society  in  the  rela- 
tion in  which  they  stand  to  the  best  social 
ideas  of  the  present  time.”  He  was  a full  be- 
liever in  the  views  of  Locke,  Montesquieu, 
Hume,  and  Smith  in  regard  to  money  ; in  those 
of  Ricardo  on  rent,  and  Malthus  on  population. 
He  combats  with  much  energy  “protection- 
ism,” but  holds  that  there  is  one,  and  only  one 
case,  “in  which,  on  mere  principles  of  politi- 
cal economy,  protecting  duties  can  be  defensi- 
ble;” that  is,  “when  they  are  imposed  tem- 
porarily (especially  in  a young  and  rising  na- 
tion), in  hopes  of  naturalizing  a foreign  indus- 
try, in  itself  perfectly  suitable  to  the  circum- 
stances of  the  country.”  Mill  was  long  among 
the  ablest  and  most  distinguished  supporters 
of  the  wage-fund  theory,  which,  stated  by  him 
so  lately  as  May,  1869,  in  the  “Fortnightly  Re- 
view,” is  briefly  as  follows  : “ There  is  supposed 
to  be,  at  any  given  instant,  a sum  of  wealth 
which  is  unconditionally  devoted  to  the  pay- 
ment of  wages  of  labor.  This  sum  is  not  re- 
garded as  unalterable,  for  it  is  augmented  by 
saving,  and  increases  with  the  progress  of 
wealth  ; but  it  is  reasoned  upon  as  at  any  given 
moment  a predetermined  amount.  More  than 
that  amount  it  is  assumed  that  the  wages- 
receiving  class  cannot  possibly  divide  among 
them ; that  amount,  and  no  less,  they  cannot 
but  obtain.  So  that,  the  sum  to  be  divided 
being  fixed,  the  wages  of  each  depend  solely 
on  the  divisor,  the  number  of  participants.” 
This  theory,  with  Mill  as  its  especial  defend- 
er, was  very  vigorously  attacked  in  1866  by 
Francis  D.  Longe,  a London  barrister,  in  a 
pamphlet  entitled  “ A Refutation  of  the  Wage- 
Fund  Theory  of  Modern  Political  Economy  ” 
(2d  ed.,  1869).  In  1869  W.  T.  Thornton  pub- 
lished a volume  “On  Labor,  its  Wrongful 
Claims  and  Rightful  Hues,”  in  which  he  also 
assailed  the  wage-fund  theory,  but,  as  is  be- 
lieved, by  no  means  so  ably  as  Longe  had 
done.  Mill,  in  the  magazine  article  above 
cited,  entirely  recanted  his  belief  in  the  the- 
ory, on  the  ground  that  Thornton  had  com- 
pletely refuted  it.  Hut  Prof.  Cairnes,  among 
other  English  economists,  has  refused  to  ac- 
cept the  acknowledgment  of  Mill  as  evidence 
of  the  falsity  of  the  theory.  A careful  exam- 
ination of  this  theory  Avill  show  that  it  is  but 
an  elaboration  of  the  doctrine  of  Adam  Smith 


12 


POLITICAL  ECONOMY 


quoted  above,  to  the  effect  that  the  demand  for 
labor  can  only  increase  in  proportion  to  the 
increase  of  the  “funds  destined  for  the  pay- 
ment of  wages.” — zlmong  the  most  prominent 
of  English  political  economists  at  the  present 
day  is  Prof.  J.  E.  Cairnes,  whose  most  elabo- 
rate production,  “ Some  leading  Principles  of 
Political  Economy  newly  Expounded,”  was 
published  in  1874.  While  the  author  says  that 
it  is  “ an  attempt  to  recast  some' considerable 
portion  of  political  economy,”  he  would  “ be 
sorry  it  were  regarded  as  in  any  sense  antag- 
onistic in  its  attitude  toward  the  science  built 
up  by  the  labors  of  Adam  Smith,  Malthus, 
Kicardo,  and  Mill.”  “ Nor  do  the  final  con- 
clusions which  I have  reached  differ  very  wide- 
ly on  any  important  points  from  those  at 
which  they  have  arrived.  The  points  on  which 
I have  ventured  to  join  issue  with  them  are 
what,  in  Bacon’s  language,  may  be  called  the 
axiomata  media  of  the  science — those  interme- 
diate principles  by  means  of  which  the  de- 
tailed results  are  connected  with  the  higher 
causes,  which  produce  them.  If  I have  not 
deceived  myself,  there  is  in  this  portion  of 
political  economy,  as  at  present  generally  re- 
ceived, no  small  proportion  of  faulty  mate- 
rial.” Prof,  W.  Stanley  Jevons,  M.  A.,  pub- 
lished in  1871  “ The  Theory  of  Political  Econ- 
omy,” in  which  he  endeavors  to  construct  a 
theory  of  the  subject  on  a mathematical  or 
quantitative  basis,  believing  that  many  of  the 
commonly  received  theories  are  perniciously 
erroneous.  He  treats  political  economy  as  the 
calculus  of  pleasure  and  pain,  and  he  applies  the 
differential  calculus  to  wealth,  utility,  value, 
demand,  supply,  capital,  interest,  labor,  &c. 
Prof.  Henry  Fawcett’s  “ Manual  of  Political 
economy”  (18G3),  which  has  passed  through 
several  editions,  is  very  decided  in  its  advo- 
cacy of  Ricardo’s  theory  of  rent  and  Malthus’s 
of  population.  The  book,  like  almost  all  of 
its  school,  treats  solely  of  a science  of  wealth. 
While  the  author  is  in  the  fullest  sense  of  the 
word  a believer  in  the  doctrines  of  Locke,  Mon- 
tesquieu, and  Hume  in  regard  to  the  effect  of  the 
volume  of  money  on  prices,  he  maintains  that 
the  use  of  the  various  forms  of  credit  and  of 
checks  and  clearing  houses  may  increase  prices 
in  a like  manner  with  an  increase  in  the  vol- 
ume of  money.  He  takes  ground  against  the 
wisdom  and  expediency  of  Sir  Robert  Peel’s 
bank-charter  act.  (See  Bank.) — Herbert  Spen- 
cer has  projected  “Principles  of  Sociology,”  as 
a part  of  his  system  of  philosophy,  the  publica- 
tion of  which  was  begun  in  1860.  In  1873  he 
published  “The  Study  of  Sociology.”  “ Several 
years  since,”  says  Prof.  E.  L.  Youmuns,  “Mr. 
Spencer  foresaw  the  difticulty  that  would  arise 
in  working  out  the  principles  of  social  science, 
from  a lack  of  the  data  or  facts  necessary  as 
a basis  of  reasoning  upon  the  subject,  and  he 
saw  that  before  the  philosophy  could  be  elabo- 
rated these  facts  must  be  systematically  and 
exhaustively  collected;”  and  he  quotes  Spen- 
cer as  early  as  1859  to  show  how  clearly  he 


then  “perceived  the  nnture,  diversity,  and  ex- 
tent of  the  facts  upon  which  a true  social 
science  must  rest.” — Almost  the  entire  existing 
school  of  English  political  economists  advocate 
“ free  trade  ” as  the  rule  of  intercourse  between 
nations.  Exceptions  may  be  named  in  the  Rt. 
Hon.  Sir  John  Barnard  Byles,  author  of  “ So- 
phisms of  Free  Trade  and  Popular  Political 
Economy”  (London,  1849;  9th  ed.,  1870),  and 
Sir  Edward  Sullivan,  “Protection  to  Native 
Industry”  (London  and  Philadelphia,  1870). — 
Dr.  Franklin  is  the  earliest  American  politico- 
economic  writer  of  whom  we  have  any  rec- 
ord; he  published  at  Philadelphia  in  1729  “A 
Modest  Inquiry  into  the  Nature  and  Necessity 
of  a Paper  Currency,”  of  which  at  a subse- 
quent period  he  said:  “It  was  well  received 
by  the  common  people  in  general,  but  the  rich 
men  disliked  it,  for  it  increased  and  strength- 
ened the  clamor  for  more  money ; and  as  they 
happened  to  have  no  writers  among  them  that 
were  able  to  answer  it,  their  opposition  slack- 
ened, and  the  point  was  carried  by  a majority 
in  the  house.”  This  was  followed  by  “ Obser- 
vations concerning  the  Increase  of  Mankind 
and  the  Peopling  of  Countries”  (1751),  other 
papers  on  paper  money  before  and  during  the 
revolution,  and  various  other  productions.  In 
some  of  these  he  maintained  doctrines  par- 
taking somewhat  of  those  of  the  school  of 
Quesnay;  in  others  he  is  shown  to  have  pre- 
sented in  advance  of  Adam  Smith  views  such 
as  were  elaborated  and  brought  into  promi- 
nence by  that  author.  “ A Discourse  concern- 
ing the  Currencies  of  the  British  Plantations 
in  America,  especially  with  regard  to  their 
Paper  Money,”  published  in  Boston  in  1740 
and  reprinted  in  Lord  Overstone’s  volume  of 
“ Scarce  and  Valuable  Tracts  on  Paper  Currency 
and  Banking  ” (1857),  is  a valuable  production, 
evincing  much  research.  In  a “Letter  from  a 
Gentleman  in  Philadelphia  to  his  Friend  in 
London,”  published  in  1765,  known  to  have 
been  written  by  John  Dickinson,  afterward 
president  of  Pennsylvania,  and  a member  of 
congress  during  the  revolution,  the  current  of 
trade  with  the  mother  country,  the  extent  to 
which  that  trade  had  exhausted  the  colonies  of 
coin,  the  importance  of  an  emission  of  paper 
money  properly  secured,  the  policy  of  pro- 
moting manufactures  among  themselves,  and 
other  questions  of  this  character,  are  exam- 
ined. In  1791  appeared  in  Philadelphia  “Po- 
litical Essays  on  the  Nature  and  Operations  of 
Money,  Public  Finances,  and  other  Subjects, 
published  during  the  American  War  and  con- 
tinued up  to  the  Present  Y"ear,”  by  Pelatiah 
AVebster.  These  essays  are  full  of  facts,  fig- 
ures, and  vigorous  reasoning.  The  author  was 
a violent  opponent  of  paper  money,  and  espe- 
cially of  its  issue  in  the  manner  in  which  it 
had  been  done  by  the  continental  congress, 
almost  without  limit,  and  Avithout  the  neces- 
sary taxation  to  withdraw  it  from  circula- 
tion. On  Jan.  14,  1790,  Alexander  Hamil- 
ton, the  first  secretary  of  the  treasury  un- 


POLITICAL  ECONOMY 


der  the  federal  constitution,  presented  to  the 
Iiouse  of  representatives  a report  on  finance, 
which  was  followed  on  April  23  by  one  on 
duties  upon  imports ; Dec.  13,  on  public  cred- 
it; Dec.  14,  on  a national  bank;  Jan.  28, 
1791,  on  the  establishment  of  a mint;  and 
Dec.  5,  on  manufactures.  It  would  be  dif- 
ficult to  find,  among  all  the  state  papers  or 
treatises  on  political  economy  which  appeared 
before  the  close  of  the  18th  century,  any  pro- 
ductions of  this  character  surpassing  these  in 
a thorough  knowledge  of  the  subjects,  clear- 
ness and  precision  of  statement,  and  logical 
exactness.  The  report  of  Alexander  J.  Dallas, 
secretary  of  the  treasury,  to  the  house  of  rep- 
resentatives, Oct.  17,  1814,  on  the  national 
finances,  and  that  of  Feb.  12,  1816,  in  regard 
to  a general  tariff  of  duties,  are  among  the 
able  economic  state  papers  which  have  emana- 
ted from  this  government.  The  “Addresses 
of  the  Philadelphia  Society  for  the  Promo- 
tion of  National  Industry”  (1819),  and  “The 
New  Olive  Branch”  (1820),  subsequently  with 
other  papers  collected  and  published  under  the 
title  of  “Essays  on  Political  Economy  ” (1822), 
by  Mathew  Carey,  dealt  almost  entirely  in 
facts,  figures,  and  references  to  history;  and 
thus  Carey  reached  the  conviction  that  “there 
is  a complete  identity  of  interest  between  agri- 
culture, manufactures,  and  commerce.”  The 
first  formal  treatise  on  the  subject  written 
in  the  United  States  is  Daniel  Raymond’s 
“ Thoughts  on  Political  Economy  ” (Baltimore, 
1820).  The  author  endeavors,  and  with  some 
success,  to  escajie  from  the  complications  and 
inconsistencies  of  the  economists.  His  exam- 
ination of  some  of  the  arguments  of  Adam 
Smith  in  regard  to  stock  are  original,  vigor- 
ous, and  conclusive.  John  Rae,  a Scotchman, 
published  in  Boston  in  1834  a “Statement 
of  some  New  Principles  on  the  subject  of 
Political  Economy,”  which  has  been  quoted 
and  highly  commended  by  John  Stuart  Mill 
in  his  “ Principles  of  Political  Economy,” 
and  he  says  of  it:  “In  no  other  book  known 
to  me  is  so  much  light  thrown,  both  from 
principles  and  history,  on  the  causes  which 
determine  the  accumulation  of  capital.” — In 
1835  appeared  at  Philadelphia  an  “Essay  on 
the  Rate  of  Wages,”  the  first  of  the  works 
of  Henry  C.  Carey.  He  took  ground  against 
regarding  political  economy  as  the  science  of 
wealth,  and  insisted  upon  considering  its 
“great  object”  and  “its  chief  claim  to  atten- 
tion the  promotion  of  the  happiness  of  na- 
tions.” This  -was  followed  by  his  “Principles 
of  Political  Economy”  (3  vols.,  1837-’40), 
in  which  he  holds  that  value  is  determined 
by  the  cost  of  reproduction,  and  that  every 
improvement  in  the  mode  of  producing  any 
commodity  tends  to  lessen  the  value  of  com- 
modities of  the  same  description  previously 
existing;  that  in  all  advancing  countries  ac- 
cumulated capital  has  a constant  tendency  to 
fall  in  value  when  compared  with  labor ; labor 
therefore  steadily  growing  in  its  power  to 


13 

command  capital,  and  e converso  the  power  of 
capital  over  labor  as  steadily  diminishing;  la- 
bor and  capital  in  their  combined  action  con- 
tinually producing  a larger  return  for  the  same 
outlay,  of  which  larger  return  an  increasing 
proportion  goes  to  the  laborer,  while  the  share 
of  the  capitalist  diminishes  in  its  proportion, 
but  increases  in  amount,  being  taken  from  a 
larger  yield.  In  1848  appeared  Mr.  Carey’s 
work  entitled  “ The  Past,  the  Present,  and  the 
Future.”  Its  object  was  that  of  demonstrating 
the  existence  of  a simple  and  beautiful  law  of 
nature  in  virtue  of  which  the  work  of  occupa- 
tion and  cultivation  of  the  earth  had  always  of 
necessity  begun  upon  the  higher,  drier,  and 
poorer  lands,  passing  thence,  with  the  growth 
of  wealth  and  population,  to  the  lower  and 
richer  soils,  with  constant  increase  in  the  re- 
turn to  labor.  Here  was  a complete  rever- 
sal of  the  doctrines  of  Malthus  and  Ricardo. 
In  his  “ Principles  of  Social  Science  ” (8  vols. 
8 VO,  Philadelphia,  185’8-’9),  he  most  clearly 
draws  the  distinction  between  the  science, 
which  treats  of  the  natural  laws  governing 
the  subject,  and  the  art,  political  economy,  by 
means  of  which  the  obstructions  to  the  opera- 
tion of  those  laws  may  be  removed.  Lie  de- 
fines his  subject  as  being  “the  science  of  the 
laws  which  govern  man  in  his  efforts  to  se- 
cure for  himself  the  highest  individuality  and 
the  greatest  power  of  association  with  his  fel- 
low man.”  The  more  numerous  the  differences 
in  the  demands  of  society,  the  more,  complete 
becomes  the  development  of  the  individualities 
of  its  members,  the  greater  is  the  power  of  as- 
sociation and  combination,  the  more  rapid  the 
progress,  and  the  more  perfect  the  responsi- 
bility for  the  proper  use  of  the  faculties  which 
have  been  developed.  Llere,  as  everywhere, 
it  is  shown  that  in  variety  there  is  unity,  and 
that  the  nation  which  would  have  peace  and 
harmony  at  home  and  abroad  must  adopt  a 
policy  which  shall  develop  the  infinitely  va- 
rious faculties  of  its  people — the  plough,  the 
loom,  and  the  anvil  working  together,  each  for 
the  advantage  of  the  others.  The  social  laws 
are  thus,  according  to  Carey,  identical  with 
those  which  govern  matter  in  all  its  various 
forms ; differences  everywhere  exciting  forces, 
forces  exciting  heat  in  matter  and  impulse  in 
mind,  and  heat  and  impulse  reexciting  motion. 
Nature’s  laws  being  thus  universal,  the  branch- 
es of  science  constitute  but  one  great  and  har- 
monious whole,  the  social  parts  demanding  the 
same  methods  of  study  and  investigation.  The 
methodical  study  of  nature  does,  and  of  neces- 
sity must,  take  the  place  of  the  metaphysical. 
The  third  chapter  of  the  book  is  devoted  to  an 
exposition  of  the  great  series  of  changes  which 
the  earth  must  undergo  in  furnishing  the  resi- 
dence and  support  of  vegetable,  animal,  and 
human  life  in  the  order  of  their  respective  ap- 
pearances upon  it,  the  relation  and  dependence 
of  their  various  subsistence  upon  each  other, 
and  the  circulation  of  the  common  elements 
of  their  structure,  beginning  with  the  disinte- 


POLITICAL  ECONOMY 


grated  rock  in  its  simplest  forms,  and  thence 
ascending  through  vegetable  and  animal  organ- 
isms to  that  of  man,  in  which  their  greatest 
complexity  and  highest  sphere  are  reached,  and 
whence  they  are  again  set  free  to  pass  through 
that  never  ending  circuit  which  constitutes  the 
entire  organic  and  inorganic  creation,  one  per- 
fectly balanced  system  of  universal  exchange ; 
an  incessant  flux  of  the  forms  of  matter  in 
their  ascent  from  the  simple  to  the  most  com- 
plex, adjusted  precisely  to  the  growing  require- 
ments of  the  successive  orders  of  being  in  the 
great  scale  of  vital  development,  the  higher 
forms  of  being  never  outgrowing  or  overtop- 
ping the  lower  from  which  they  spring,  and 
to  which  they  must  of  necessity  return.  Such 
are  the  reciprocities  of  motion,  force,  and  func- 
tion, in  which  Carey  finds  an  order  and  a sys- 
tem which,  as  he  believes,  put  to  flight  the  doc- 
trine of  discords  and  disproportions  announced 
by  Malthus,  and  since  adopted  by  so  many  of 
the  economists  of  Europe.  A chapter  on  the 
new  doctrine  of  the  occupation  of  the  earth, 
already  referred  to,  is  followed  by  one  devoted 
to  an  examination  of  the  question  of  value. 
Utility,  according  to  Carey,  is  the  measure  of 
man’s  power  over  nature.  All  the  utilities  de- 
veloped centre  themselves  in  man,  with  con- 
stant increase  of  his  power,  and  as  constant 
decline  of  values,  which  are  but  the  measure 
of  nature’s  resistance  to  the  gratification  of 
man’s  desires.  Wealth  consists  in  man’s  power 
to  command  the  always  gratuitous  services 
of  nature.  Production  consists  in  directing 
the  forces  of  nature  to  the  service  of  man. 
Every  act  of  consumption  is  also  an  act  of  pro- 
duction, water  being  consumed  in  the  produc- 
tion of  air,  air  being  consumed  in  the  production 
of  water,  both  being  consumed  in  the  produc- 
tion of  plants,  which  in  their  turn  are  consumed 
in  the  production  of  men  and  animals,  all  of 
which  are  finally  resolved  into  the  elements  of 
which  they  are  composed,  to  go  their  round 
again  in  the  reproduction  of  plants,  apimals, 
and  men.  Capital  is  the  instrument  by  the  aid 
of  which  the  work  is  done,  whether  existing 
in  the  form  of  land  and  its  improvements, 
ships,  ploughs,  mental  development,  books,  or 
corn.  Trade  is  the  performance  of  exchanges 
for  other  persons,  and  is  the  instrument  used 
by  commerce,  which  consists  in  the  exchange 
of  services,  products,  or  ideas  by  men  with  their 
fellow  men.  As  men  are  more  and  more  en- 
abled to  associate,  commerce  increases,  but  the 
power  of  trade  declines ; the  growth  of  the  one 
being  here,  as  in  the  case  of  utility  and  value, 
in  the  inverse  ratio  of  the  other.  Money  is  re- 
garded as  the  great  instrument  of  association, 
power  growing  everywhere  with  increase  in 
the  ability  to  command  the  services  of  the 
precious  metals.  Price  is  the  value  of  a com- 
modity as  measured  by  money.  Prices  of 
land,  labor,  and  all  raw  materials  tend  to  rise 
with  every  increase  in  the  power  of  associa- 
tion, that  increase  being  attended  by  decline 
in  the  prices  of  finished  commodities.  They 


tend  therefore  to  approximate,  and  it  is  in  the 
closeness  of  that  approximation  that  Carey 
finds  the  highest  evidence  of  advancing  civili- 
zation. In  his  opinion  trade  appears  first,  to 
be  followed  by  manufactures;  and  it  is  not 
until  the  latter  have  been  develoi)ed,  and  a 
market  has  been  thus  made  in  the  neighbor- 
hood of  the  farm,  that  any  real  agriculture 
makes  its  appearance.  The  more  complete  the 
development  of  diversified  industries,  including 
agriculture,  the  greater  is  the  tendency  toward 
an  influx  of  the  precious  metals,  which  like 
other  raw  materials  tend  always  toward  those 
places  at  which  finished  commodities  are  cheap- 
est. Circulating  notes  diminish  the  value  of 
the  precious  metals,  but  increase  their  utility, 
with  constant  diminution  in  the  rate  of  inter- 
est, and  equally  constant  increase  in  the  tenden- 
cy toward  equality  among  men,  and  strength  in 
the  communities  of  which  they  are  a part.  The 
power  of  accumulation  is  in  the  direct  ratio  of 
the  rapidity  of  the  societary  movement.  Pow- 
er grows  with  every  increase  in  the  numbers 
that  can  obtain  food  from  any  given  space; 
and  here  we  reach  the  law  of  population  pro- 
pounded by  Carey.  Agriculture,  as  has  been 
seen,  becomes  more  productive  as  men  are 
more  and  more  enabled  to  combine.  The  more 
they  can  combine,  the  less  is  the  waste  of  hu- 
man power  in  the  search  for  food,  and  the  less 
the  muscular  effort  required  for  producitjg  any 
given  effect;  the  locomotive  of  civilized  soci- 
ety doing  the  work  that  in  savage  life  is  done 
by  the  shoulders  of  the  man,  and  the  great 
steam  mill  grinding  the  grain  that  before  had 
required  the  severest  labor.  Vegetable  food  is 
largely  substituted  for  animal  food ; the  ten- 
dency toward  this  substitution  being  always 
greatest  in  those  communities  in  which  grow- 
ing wealth  most  manifests  itself  in  the  clear- 
ing, drainage,  and  culture  of  those  rich  soils 
which,  according  to  Ricardo,  are  cultivated 
when  men  are  poor,  wmak,  and  scattered,  but 
which,  according  to  Carey,  are  last  brought 
under  human  power,  tlieir  very  wealth  forbid- 
ding their  occupation  by  the  early  cultivator. 
The  more  perfect  the  development  of  the  la- 
tent powers  q|  the  earth,  and  the  greater  the 
development  of  man’s  peculiar  faculties,  the 
greater  is  the  competition  for  the  purchase  of 
labor,  the  greater  is  the  freedom  of  man,  the 
more  equitable  is  the  distribution  of  the  prod- 
ucts of  labor,  and  the  greater  is  man’s  feeling 
of  responsibility  for  his  action  in  the  present 
and  of  hope  in  the  future.  The  higher  that 
feeling,  the  greater  the  tendency  toward  matri- 
mony as  affording  the  means  of  indulging  af- 
fection for  wife  and  children,  and  the  love  of 
home.  The  Malthusian  theory  Carey  holds  to 
be  irreconcilably  inconsistent  with  the  real  laws 
of  nature  as  seen  in  the  occupation  of  the  earth, 
and  the  relative  powers  of  increase  in  vegeta- 
ble life  and  in  the  lower  forms  of  animal  life 
and  in  man.  The  sphere  of  action  of  govern- 
ment in  directing  the  commerce  of  the  state  is 
strictly  limited  to  the  removal  of  the  obstacles 


POLITICAL  ECONOMY 


15 


to  perfect  combination  and  association.  Real 
freedom  of  trade  consists  in  the  power  to  main- 
tain direct  commerce  with  the  outside  world. 
To  reach  it  there  must  be  a diversity  of  em- 
ployments, enabling  the  exporting  country  to 
send  its  commodities  abroad  in  a finished 
shape.  Centralization,  such  as  is  established 
by  the  British  system,  is  opposed  to  this,  and 
therefore  it  is  that  that  system  is  resisted  by 
all  the  advancing  communities  of  the  world, 
they  being  enabled  to  advance  in  the  precise 
ratio  with  their  power  to  resist  it.  Protection 
being  the  form  assumed  by  that  resistance,  its 
object  may  be  properly  defined  as  being  that 
of  establishing  perfect  freedom  of  commerce 
among  the  nations  of  the  world.  Societary 
organization  furnishes  additional  evidence  of 
the  universality  of  nature’s  laws,  for  through- 
out her  realms  dissimilarity  of  parts  furnishes 
conclusive  evidence  of  the  perfection  of  the 
whole — the  highest  organization  presenting  the 
most  numerous  differences.  The  higher  the 
organization  the  more  complete  the  subordina- 
tion of  parts,  and  the  more  harmonious  and 
beautiful  their  interdependence ; and  the  more 
complete  that  interdependence  the  greater  the 
individuality  of  the  whole,  and  the  more  per- 
fect the  power  of  self-direction.  In  1873  Mr. 
Carey  published  “The  Unity  of  Law  as  exhib- 
ited in  the  Relations  of  Physical,  Social,  Men- 
tal, and  Moral  Science.”  The  writers  who 
have  adopted  in  whole  or  in  part  the  doctrines 
of  Carey,  and  have  published  books  or  papers 
on  the  subject,  are:  in  the  United  States,  E. 
Peshine  Smith,  “A  Manual  of  Political  Econo- 
my ”(1853);  Dr.  William  Elder,  “Questions  of 
the  Day,  Economic  and  Social  ” (1870) ; Robert 
Ellis  Thompson,  “ Social  Science  and  Nation- 
al Economy”  (1875);  in  Germany,  Prof.  Eu- 
gene Duhring  of  Berlin,  Carey'' s Umwdlzungder 
Volhswirthschaftslehre  and  Socialwissenschaft 
(1865),  Gayital  und  Arheit^  neue  Antworten 
avf  alte  Fragen  (1865),  Die  Verhleinerer  Ca- 
rey''s und  die  Krisis  der  Nationalolconomie 
(1867),  Kritische  GescJiichte  der  Nationaldlco- 
nomie  und  des  Socialismus  (1871),  and  Cursus 
der  National-  und  Socialokonomie  p873);  in 
France,  M.  de  Eontenay,  M.  Ra|[pi^,  and  M. 
Clapier ; in  Italy,  Signor  Ferrara,"late  min- 
ister of  finance  and  editor  of  Biblioteca  delV 
economista. — American  writers  other  than  those 
' already  named  are  Prof.  Francis  Bowen,  Con- 
dy  Raguet,  Prof.  Way  land.  Prof.  H.  Vethake, 
George  Opdyke,  Prof.  Amasa  Walker,  Prof. 
A.  L.  Perry,  and  David  A.  Wells.  Prof. 
Bowen  published  in  1856  “ Principles  of  Po- 
litical Economy,”  which  was  revised  and  re- 
published in  1870  under  the  title  “American 
Political  Economy,  including  Strictures  on  the 
Management  of  the  Currency  and  Finances 
since  1866.”  He  says  with  much  truth  : “ The 
entire  science  of  English  political  economy 
may  be  said  to  be  built  upon  three  leading 
theories,  that  of  Adam  Smith  concerning  free 
trade,  that  of  Malthus  in  regard  to  population, 
and  that  of  Ricardo  in  regard  to  rent.”  In 


none  of  these  does  he  agree  with  the  English 
school,  although  he  recognizes  that  they  con- 
tain a mixture  of  truth  and  falsehood.  Condy 
Raguet  was  a decided  follower  of  the  English 
school,  especially  in  regard  to  free  trade  and 
the  theory  of  money.  Profs.  Way  land  and 
Vethake  mainly  followed  the  English  writers. 
Mr.  Opdyke  believes  that  “free  trade,  abso- 
lute, unconditional  free  trade,  and  direct  tax- 
ation, is  the  true  policy  of  all  nations,  and  of 
each  nation  regardless  of  the  course  pursued 
by  all  others.”  He  holds  that  bank  deposits 
payable  on  demand  are  money,  and  is  opposed 
to  paper  money  made  convertible  with  coin, 
but  thinks  that  the  government  of  the  United 
States  should  issue  inconvertible  paper  money 
to  the  amount  of  $10  a head  of  the  population, 
which  should  circulate  in  common  with  coin, 
each  being  equally  a legal  tender.  These  views 
were  promulgated  in  1851  in  “A  Treatise  on 
Political  Economy.”  In  1866  Dr.  Amasa  Walk- 
er published  “The  Science  of  Wealth,  a Man- 
ual of  Political  Economy,  embracing  the  Laws 
of  Trade,  Currency,  and  Finance,”  which  has 
been  repeatedly  revised  and  republished.  Dr. 
Walker  is  a decided  adherent  of  the  views  of 
Montesquieu  and  Hume  on  money,  holds  to 
Ricardo’s  theory  of  rent,  but  not  to  Malthus’s 
law  of  population,  and  is  strongly  in  favor  of 
free  trade.  Prof.  Perry  published  his  “ Ele- 
ments of  Political  Economy”  in  1865,  and  it 
has  passed  through  several  editions.  He  re- 
gards the  “word  wealth”  as  “the  bane  of 
political  economy,”  “the  bog  whence  most  of 
the  mists  have  arisen  which  have  beclouded 
the  whole  subject.”  He  adds  that  the  defini- 
tion given  by  Archbishop  Whately,  “the  sci- 
ence of  exchange,”  or  “its  precise  equivalent, 
the  science  of  value,  gives  a perfectly  definite 
field  to  political  economy.”  Value,  he  holds, 
“is  always  and  everywhere  the  relation  be- 
tween two  services  exchanged,”  while  utility  he 
regards  as  the  “ capacity  which  anything  or  any 
service  has  to  gratify  any  human  desire  what- 
ever.” In  regard  to  Malthus’s  law  of  popula- 
tion, he  holds  “that  the  alleged  laws  of  nature 
in  respect  to  the  increase  of  population  and 
food,  which  are  said  to  be  antagonistic,  have 
never  yet  been  proved.”  In  regard  to  distri- 
bution he  says : “ I wish  at  this  point  to  bear 
testimony  to  his  (Carey’s)  great  merit  as  the 
original  discoverer  of  the  beautiful  law  of  dis- 
tribution, in  the  light  of  which  the  future  con- 
dition of  the  laboring  classes  of  all  countries, 
if  they  are  only  true  to  themselves,  seems 
hopeful  and  bright.”  In  regard  to  the  occupa- 
tion of  the  earth  and  to  rent,  he  takes  a middle 
ground  between  Ricardo  and  Carey.  On  the 
subject  of  money  he  is  a decided  follower  of 
Locke,  Montesquieu,  and  Hume,  and  upon  this 
and  foreign  trade  is  utterly  opposed  to  the 
doctrines  of  the  mercantile  school  of  former 
days  and  the  protectionists  or  the  national 
school  of  the  present.  Mr.  Wells  has  princi- 
pally devoted  his  attention  to  the  subject  of 
foreign  trade,  tariffs,  and  taxation  generally, 


1() 


POLITICAL  ECONOMY! 


3112  062289852 


and  is  fully  in  accord  with  the  English  school 
of  the  present  time. — The  names  and  doctrines 
of  most  of  the  leading  economists  of  Great 
Britain  and  the  United  States,  other  than  those 
who  confine  themselves  to  the  examination  of 
questions  of  finance  and  hanking,  have  been 
already  mentioned.  In  this  class  Henry  Dun- 
ning McLeod,  Prof.  Bonamy  Price,  R.  H.  Pat- 
terson, and  R.  H.  Inglis  Palgrave  now  hold  a 
prominent  position  in  England.  The  late  Ste- 
phen Colwell  of  Philadelphia  published  in  18o9 
(2d  ed.,  1860)  “The  Ways  and  Means  of  Pay- 
ment, a full  Analysis  of  the  Credit  System, 
with  its  Various  Modes  of  Adjustment,”  which 
is  still  the  most  exhaustive  examination  of  this 
entire  field  in  the  English  language,  giving 
both  his  own  views  and  those  of  his  prede- 
cessors, and  a fuller  and  more  complete  state- 
ment of  moneys  of  account  than  any  previous 
writer. — In  France,  among  the  more  distin- 
guished writers  on  political  economy  are  Blan- 
qui,  Tracy,  Louis  Say,  Droz,  Rossi,  Cheva- 
lier, Dunoyer,  Gamier,  Baudrillart,  Bastiat, 
Fontenay,  Ooquelin,  Faucher,  Reybaud,  and 
Wolowski.  One  of  the  most  noted  of  these 
was  Frederic  Bastiat,  whose  works  were  pub- 
lished collectively  after  his  death  (6  vols.,  Pa- 
ris, 1855 ; new  ed.,  1862).  He  was  a strong  par- 
tisan of  free  trade,  and  a decided  follower  of 
Locke,  Montesquieu,  and  Hume  in  regard  to 
money,  holding  that  “it  is  quite  unimportant 
whether  there  is  much  or  little  money  in  the 
world.  If  there  is  much,  much  will  be  used ; 
if  there  is  little,  little  is  required;  that  is  all.” 
His  most  important  work  is  his  Harmonies 
economiques  (1850),  maintaining  the  doctrine 
that  “all  legitimate  interests  are  harmonious,” 
which  he  sought  to  demonstrate  by  doctrines 
greatly  resembling  Carey’s  theory  of  value, 
and  the  consequent  law  of  distribution,  enunci- 
ated in  1837.  Speaking  of  the  law  of  distribu- 
tion, he  says : “ Thus  the  great  law  of  capital 
and  labor,  as  regards  the  distribution  of  the 
products  of  their  joint  labors,  is  settled.  The 
absolute  quantity  of  each  is  greater,  but  the 
proportional  part  of  capital  constantly  dimin- 
ishes, as  compared  with  that  of  labor.”  It 
need  hardly  be  added  that  he  took  issue  with 
the  theories  of  Ricardo  and  Malthus.  M.  Michel 
Chevalier  has  principally  devoted  himself  to 
the  questions  of  policy  growing  out  of  inter- 
national trade,  and  is  a thorough  partisan  of 
free  trade,  having  taken  a leading  part  in  the 
reciprocity  treaty  between  Great  Britain  and 
France  in  1860. — Germany  has  produced  many 
works  on  all  branches  of  the  subject.  The 
formation  of  the  German  Zolherein  or  customs 
union,  establishing  entirely  free  inter-state 
trade  among  the  states  composing  it,  with 
such  a policy  as  should  protect  their  domes- 
tic production  from  external  disturbance,  was 
due  to  no  man  more  than  to  Friedrich  List. 
His  “National  System  of  Political  Economy” 
(Stuttgart,  1841 ; English  by  G.  A.  Matile, 
Philadelphia,  1856)  is  built  upon  observation 
and  history.  “ Nationality,”  says  the  English 


translator,  “is  the  ruling  idea  of  the  book; 
but  with  his  vigorous  mind  and  clear  intelli- 
gence, he  enlarges  it  until  it  comprehends 
every  topic  of  human  welfare.”  “The  Ger- 
man eclectic  works,”  says  Colwell,  “ furnish  a 
vast  amount  of  well  arranged  information,  and 
they  may  always  be  consulted  with  advantage. 
We  would  refer,”  he  adds,  “especially  to  the 
works  of  Schmalz,  Jakob  Volgriiff,  Krause, 
K.  H.  Rau,  Lotz,  Hermann,  and  Schon;  but 
there  are  others  of  equal  merit.”  To  these 
names  may  be  added  K.  A.  Struensee,  K.  F. 
Nebenius,  J.  G.  Busch,  Schdnberg,  Wappaus, 
Schaflle,  Scheel,  Hermann,  Walcker,  and  Bren- 
tano. — In  Italy  much  attention  has  been  given 
to  political  economy  from  an  early  period,  and 
a collection  of  Italian  economists  in  50  vols. 
8vo  was  published  at  Milan  in  1803-’! 6.  The 
Biblioteca  delV  eeonomista^  another  collection 
of  Italian  and  foreign  writers,  edited  by  Fran- 
cesco Ferrara,  professor  of  political  economy 
in  the  university  of  Turin,  and  an  adherent  to 
the  school  of  Adam  Smith,  has  been  for  several 
years  in  course  of  publication.  “In  1764,” 
says  Say,  “Genovesi  commenced  a public 
course  of  lectures  on  political  economy  from 
the  chair  founded  by  the  care  of  the  highly 
esteemed  and  learned  Intieri.  In  consequence 
of  his  example,  other  professorships  were  af- 
terward established  at  Milan,  and  more  recent- 
ly in  most  of  the  universities  in  Germany  and 
Russia.”  The  disciples  of  the  most  recent 
school  of  political  economy  in  Italy  treat  it 
as  a science  of  observation  based  on  the  in- 
vestigation and  study  of  history  and  actual 
life,  and  reject  the  notion  that  it  consists  sim- 
ply of  deductions  from  the  principle  of  indi- 
vidual interest.  The  first  number  of  their 
monthly  periodical,  entitled  Giornale  degli 
economist^  appeared  in  Padua  in  April,  1875. 
Among  the  leading  members  of  this  school 
are  Luzzatti,  Lampertico,  Forti,  and  Boccar- 
do. — Among  the  best  books  of  reference  on 
this  subject  are:  “History  of  Prices,  1793  to 
1856,”  by  Thomas  Tooke  (6  vols.  8vo,  Lon- 
don, 1838-’57),  which  argues  strongly  against 
the  theory  of  the  economists  in  regard  to  the 
effect  of  aij,  increased  volume  of  money  on 
prices,  as  maintained  by  Locke,  Montesquieu, 
and  Hume ; “ The  Literature  of  Political  Econ- 
omy,” by  J.  R.  McCulloch  (London,  1845) ; 
Dictionnaire  de  Veconomie  politique  (2  vols. 
8 VO,  Paris,  1852-’3),  a most  complete,  trust- 
w'orthy,  and  valuable  w^ork ; Histoire  de  Veco- 
nomie politique,  by  A.  Blanqui  (4th  ed.,  2 vols. 
12mo,  Paris,  1860),  containing  a catalogue  rai- 
sonne  of  political  economy,  wTiich  is  full  and 
valuable;  “ A Dictionary  of  Political  Economy, 
Biographical,  Historical,  and  Practical,”  by 
Henry  Dunning  McLeod  (vol.  i.,  London,  1863) ; 
“History  of  Agriculture  and  Prices  in  Eng- 
land,” by  J.  E.  T.  Rogers  (2  vols.  8vo,  1866); 
Dilhring,  Kritische  Gescliichte  der  Nationalo- 
Iconomie  und  des  Socialismus  (Berlin,  1871); 
and  Roscher,  Gescliichte  der  Kationalohono- 
mie  in  Deutschland  (Munich,  1874). 


